OCLG Oncologix Tech Inc (CE)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 25, 2014

 

 

ONCOLOGIX TECH, INC.

(Name of Small Business Issuer as Specified in Its Charter)

	Nevada		0-15482		86-1006416
	(State or other jurisdiction of		(Commission File Number)		(I.R.S. Employer
	Organization or Incorporation)				Identification Number)

 

1604 West Pinhook Drive

Suite # 200

Lafayette, Louisiana 70508

(Address of principal executive offices)

(616) 977-9933

(Issuer’s telephone number)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The Registrant’s Form 10-K, any Form 10-Q or any Form 8-K of the Registrant or any other written or oral statements made by or on behalf of the Registrant may contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the medical device business, and the Company itself. Statements, including without limitation, those related to: future revenue, earnings, margins, growth, cash flows, operating measurements, tax rates and tax benefits; expected economic returns; projected 2013 operating results, future strength of the Company; future brand positioning; achievement of the Company vision; future marketing investments; the introduction of new lines or categories of products; future growth or success in specific countries, categories or market sectors; capital resources and market risk are forward-looking statements. In addition, words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements.

 

Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Registrant’s views as of the date the statement was made. The Registrant undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

ITEM 1.01 – Entry into a Material Definitive Agreement

 

A.

Senior Secured Credit Agreement Amendment. On January 3, 2014, Oncologix Tech, Inc. (the “Company”), together with its subsidiaries Dotolo Research Corporation and Amian Angels, Inc., entered into a Senior Secured Revolving Credit Facility Agreement with TCA Global Credit Master Fund LP (“Lender”) for a revolving credit facility of up to Four Million Dollars ($4,000,000) for working capital financing for Borrower and for any other purposes permitted hereunder. On September 25, 2014, the Company drew down an additional loan amount of $1,200,000 to be used for working capital and the acquisition of Esteemcare Inc. and Affordable Medical Equipment Solutions Inc. In connection with the drawdown of the second tranche, the Company will be required to pay additional fees of $450,000 due after six months. This second tranche, together with the remaining principal balance of approximately $325,000 is secured by a 14.5% convertible promissory note, due in twelve months, with an extension option of an additional twelve months. Repayments of interest and fees begin immediately. Principal repayments begin December 25, 2014. The Company will redirect its customer receipts to a lockbox account. The Lender will hold back interest and fees of each deposit for the first three (3) months of the agreement and then an on-going 12.5% for principal payments and TCA Global Fund will remit all receivable balances to the Company. Monthly principal payments continue in this manner until the note is paid in full or it reaches maturity at which a balloon payment will be due. (filed herewith as Exhibit 10.1)

 

B.

Stock Purchase Agreement. On September 25, 2014, entered into a Stock Purchase Agreement, dated as of September 25, 2014, (the “Agreement”) by and among Oncologix Tech Inc. (OCLG or Company), and Madhu Mathew Mammen and Imad Siddiqui (collectively the “Owners”), for the Company to acquire 100 shares of Common Stock of Esteemcare Inc and its wholly owned subsidiary Affordable Medical Equipment Solutions Inc. (“Esteem”), which represents all of the issued and outstanding shares of Esteem (filed herewith as Exhibit 10.2).

 

C.

Secured Promissory Note. Upon closing of the Stock Purchase Agreement, we issued a Secured Promissory Note to the Owners in the Amount of $100,000 (filed herewith as Exhibit 10.3). This note bears interest at a rate of 6% per annum payable in twelve (12) monthly installments beginning on October 15, 2014. The monthly payments are calculated using a one (1) year amortization schedule and is collateralized by the stock of Esteemcare, Inc.

 

 

ITEM 2.01 – Completion of Acquisition or Disposition of Assets.

 

On September 25, 2014, a closing was held pursuant to a Stock Purchase Agreement, dated as of September 25, 2014, (the “Agreement”) by and among Oncologix Tech Inc. (“OCLG” or “Company”), and Madhu Mathew Mammen and Imad Siddiqui (collectively the “Owners”), for Company to acquire 100 shares of Common Stock of Esteemcare Inc. and its wholly owned subsidiary Affordable Medical Equipment Solutions Inc. (“Esteem”), which represents all of the issued and outstanding shares of Esteem.

 

Pursuant to the Agreement, the Owners sold all of the Common Stock of Esteem for $500,000 represented by a down payment of $400,000 at closing and a one year Secured Promissory Note for $100,000. The Owners own all of the shares of Esteem, a corporation organized under the laws of the State of South Carolina, a medical products and technologies company.

 

In connection with this acquisition, OCLG drew down a second tranche from its Senior Secured Lender in the amount of $1,200,000

 

Under the terms of the Agreement, Harold Halman was appointed President and Chief Operating Officer, Michael A. Kramarz was appointed Chief Financial Officer, and Roy Wayne Erwin was appointed Chief Executive Officer of Esteem. There were no changes to the officers or directors of the Company.

 

 

RISK FACTORS

 

Those interested in investing in the Company because of the Stock Purchase Agreement should carefully consider the following Risk Factors pertaining to Oncologix Tech as well as the risks and uncertainties that are described in the Company's most recent Annual and Quarterly Reports under the Securities Exchange Act of 1934. These Risk Factors are not all inclusive.

 

Going Concern Qualification.

 

Our Independent Accountants have expressed doubt about our ability to continue as a going concern. The ability to continue as a going concern is an issue raised as a result of the material operating losses incurred since inception, and its stockholders' deficit. We expect to continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities or obtaining loans from various financial institutions where possible. The going concern increases the difficulty in meeting such goals.

 

Lack of Audit

 

While audited financial information is not required at this time under Securities and Exchange Commission rules, such audited financial information, which will be filed within 75 days in an amendment to this Current Report on Form 8-K, may contain adjustments which substantially modify the foregoing disclosures. In addition, the audited financial information will contain footnotes which will assist the reader to better understand the business of Esteem.

 

Need for Additional Capital

 

Esteem operates with positive cash flow sufficient to service the business operations and debt payment requirements of the acquisition but will need additional funds to complete the audit of Esteem as well as costs for other required SEC and other regulatory filings. We estimate that the Company will need to raise at least $150,000 of additional funding by the end of 2014 to fund working capital relating to Esteencare. In addition, we require an additional $500,000 in capital to cover costs associated with further product development of our subsidiary, Dotolo Research Corporation. We may be unable to raise additional capital on commercially acceptable terms, if at all, and if we raise capital through additional equity financing, existing shareholders may have their ownership interests diluted. Our failure to be able to generate adequate funds from operations or from additional sources would harm our business.

 

Uncertainties Regarding Healthcare Reimbursement and Reform

 

Our ability to execute our strategy in the healthcare services and product distribution markets depends in part on the extent to which the healthcare services and Medicaid reimbursements are paid by governmental agencies, private health insurers and other organizations, for the cost of such products and related services. Our business could be harmed if healthcare payers and providers implement cost-containment measures and governmental agencies implement measures that reduce payment to our Company for the utilizations of our services.

 

Healthcare Services and Medical Product Industry Intensely Competitive

 

The healthcare service industry is very competitive. While we maintain a strong leadership position in personal care services, there is no guarantee we can maintain that market share. We will compete with both public and private healthcare service companies that hold licenses in other Regions within the State of Louisiana and directly compete with companies in the State of Louisiana that may have greater financial resources and have other competitive advantages.

 

Compliance with Government Regulations.

 

We are subject to extensive, and evolving governmental rules, regulations and restrictions administered by the Department of Health & Hospitals, the Bureau of Health Services Financing, by other federal and state agencies, and by governmental authorities.

 

Reliance on Key Personnel

Uncertainties Regarding Healthcare Reimbursement and Reform

 

Our ability to execute our strategy in the healthcare devices, services and product distribution markets depends in part on the extent to which healthcare services and Medicaid reimbursements are paid by governmental agencies, private health insurers and other organizations for the cost of such products and related services.

 

Government Regulation

 

The healthcare industry is subject to extensive regulation by a number of governmental entities at the federal, state and local level. The healthcare regulatory environment is also subject to frequent change. Laws and regulations in the healthcare industry are extremely complex. While our management believes we are in substantial compliance with all of the existing laws and regulations applicable to us, such laws and regulations are subject to rapid change and often are uncertain in their application In addition, the Patient Protection and Affordable Care Act, or PPACA, and the Health Care and Education Reconciliation Act of 2010, which amended PPACA (collectively, the "Health Reform Law"), may have a considerable impact on the financing and delivery of health care and conceivably could have a material adverse effect on our business.

 

Medicare and Medicaid Reimbursement

 

Many of the products that we provide are reimbursed by Medicare and state Medicaid programs and are therefore subject to extensive government regulation. Medicare is a federally funded program that provides health insurance coverage for qualified persons age 65 or older and for some disabled persons with certain specific conditions. Congress often enacts legislation that affects, positively or negatively, the reimbursement rates of Medicare providers and also may impact Medicaid providers. Generally, Medicare provider payment modifications occur in the context of budget reconciliation; however, Medicare changes also may occur in the context of broader healthcare policy legislation, including the Health Reform Law. In the last several years, Congress has reduced Medicare reimbursement for various providers. We are also subject to regulatory reductions and reimbursement for our products.

 

Regulation of Client Confidentiality

 

We are subject to the Health Insurance Portability and Accountability Act, or HIPAA, which established comprehensive federal standards with respect to the use and disclosure of protected health information, and the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, which was passed as part of the American Recovery and Reinvestment Act and which strengthens many of the requirements applicable to privacy and security, among other things. We provide extensive training to our staff with respect to compliance with patient confidentiality requirements and have additional systems in place to further comply with those requirements. However, the failure to meet regulatory standards concerning patient confidentiality could subject us to criminal and civil sanctions.

 

Reliance on Key Personnel

 

The success of the Company is largely dependent on Roy Wayne Erwin, the Company’s Chairman/CEO and Michael Kramarz, Chief Financial Officer and Vickie Hart, President, and Harold Halman, President, who are responsible for the day-to-day management of the business. A loss of any key executives services, either through retirement, incapacity or death, may have a material adverse effect on the Company. Our success also will depend upon our ability to attract and retain other highly qualified health services Respiratory Technicians, sales and marketing, and core administrative personnel to develop and maintain relationships with our referral physicians and clients in the industry.

 

Uncertainty as to our Ability to Grow Operations and Manage Growth.

 

Our efforts to increase market penetration will result in new and increased responsibilities for management personnel and will place a strain upon our management, financial systems, and resources. We may be required to continue to implement and to improve our management, operating and financial systems, procedures and controls on a timely basis and to expand, train, motivate and manage our employees. There can be no assurance that our personnel, systems, procedures, and controls will be adequate to support our future operations.

 

Risks Relating to Ownership of Our Common Stock

 

Our common stock is currently listed on the OTCPINK markets. Even though we expect to move to the company to become listed on the OTC:BB, we cannot predict changes in the trading market for our common stock, including changes in liquidity. A large percentage of our outstanding shares are held by a relatively small number of investors, including our Chief Executive Officer. Future sales of a substantial number of our common stock in the public markets, or the perception that these sales may occur, could affect the market price of our common stock.

 

Attraction and Retention of Qualified Personnel

 

The Company is dependent on the efforts and abilities of its senior executive officers and Managers. While the Company is confident that its Executive management team has significant experience and depth, appropriate senior management succession plans are in place. The Company's future success also depends on its ability to identify, attract and retain additional qualified personnel, case management personnel and qualified care-givers for our valued clients.

 

Broker-Dealer Requirements May Affect Trading and Liquidity of Our Common Stock

 

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account.

 

Potential investors in the Registrant's common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

 

BUSINESS

 

The HME/DME Market

 

The U.S. domestic healthcare spending is expected to increase by approximately $2.3 trillion from $2.7 trillion in 2011 to $5.0 trillion in 2022, according to the Centers for Medicare and Medicaid Services (“CMS”). Revenues for CPAP Therapy to treat sleep disorders are projected to grow at 15%-20% for the next 5 years. No other product line in undergoing this much consistent growth. Continuous Positive Airwave Pressure (CPAP) is a treatment in which a mask is worn over the nose and/or mouth while you sleep. The mask is hooked up to a machine that delivers a continuous flow of air into the nose. This air flow helps keep the airways open so that breathing is regular. CPAP is considered by many experts to be the most effective treatment for sleep apnea.

 

Esteemcare targets patients with sleep obstructive disorders or related chronic illnesses who are insured by Medicare, Medicaid, third-party insurers, or have the ability to pay for our products from their own resources. Sleep apnea is a serious sleep disorder that occurs when a person's breathing is interrupted during sleep. People with untreated sleep apnea stop breathing repeatedly during their sleep, sometimes hundreds of times. This means the brain -- and the rest of the body -- may not get enough oxygen.

 

There are two types of sleep apnea:

 

• Obstructive sleep apnea (OSA): The more common of the two forms of apnea, it is caused by a blockage of the airway, usually when the soft tissue in the back of the throat collapses during sleep.

 

• Central sleep apnea: Unlike OSA, the airway is not blocked, but the brain fails to signal the muscles to breathe, due to instability in the respiratory control center.

 

 

Sleep apnea can affect anyone at any age, even children. Risk factors for sleep apnea include:

• Being male

• Being overweight

• Being over age 40

• Having a large neck size (17 inches or greater in men and 16 inches or greater in women

• Having large tonsils, a large tongue, or a small jaw bone

• Having a family history of sleep apnea

• Gastroesophageal reflux, or GERD

• Nasal obstruction due to a deviated septum, allergies, or sinus problems

 

What Are the Effects of Sleep Apnea?

 

If left untreated, sleep apnea can result in a growing number of health problems, including:

• High blood pressure

• Stroke

• Heart failure, irregular heart-beats, and heart attacks

• Diabetes

• Depression

• Worsening of ADHD

• Headaches

 

As the baby boomer population ages, CMS estimates that the number of Americans over the age of 65 will increase from an estimated 42.6 million in 2012 to 58.3 million in 2022. The Centers for Disease Control estimates that 80% of older adults have at least one chronic condition and 50% have at least two. Esteemcare is medical distributor providing Durable and Home Medical CPAP products and related supplies. The products that we distribute are classified as Durable Medical Equipment (“DME”). CMS estimates that the national expenditures within the DME market will increase by over $27 billion from $38.9 billion in 2011 to $66.7 billion in 2022. The number of DME companies billing Medicare less than $300,000 per year has been declining, or consolidating, over the last few years according to HME News, primarily as a result of increased Medicare accreditation, bonding requirements and Medicare Competitive Bidding. We have been able to attract new referral physicians and patients looking for new suppliers as a result of consolidation within the DME market over the last few years.

 

Small medical distribution companies can compete against national companies because Home Medical Equipment (HME) and Durable Medical Equipment (DME) pricing is government regulated. Medical Device-network.com in January of 2012 reports, “The market is highly regulated, however, transparent and ‘rules-based’, small and medium enterprises (SMEs) have traditionally played a crucial role in the development of new products in the medical services, biotech and medical device industry. Because of their quick adaptability, ability to identify market niches and considerable innovative potential, these firms form an important component of the healthcare industry worldwide. Accounting for more than 50% of all pipeline products, they have a significant role in the future of the healthcare industry”. According to the U.S. Census Bureau, the generation described as the "Baby Boom" is just now reaching age 65. The United States' National Institutes of Health, National Institute for Aging projects that in the next fifteen (15) years the population aged 65 to 84 years old will grow by roughly 50%, peaking in 2025. The combined U.S. market for home healthcare products is expected to expand annually by nearly 7.0%. The Company anticipates an increased emphasis on medical equipment solutions that reduce the cost of care and improve patient outcomes. Our medical distribution strategy is to serve the growing demand for HME by building a national and international distribution network with exclusive rights to products that are positioned to address the changing industry requirements.

 

Key Market Segments Served

 

Skilled Nursing Facilities: There are in excess of 17,000 skilled nursing facilities in US with 1.84 million beds which are projected to grow 10% per annum through 2016. By 2020, a 65-year-old man could be expected to live to the age of 82 and a woman could be expected to live to the age of 85. For those over the age of 65, there is a 41 percent chance that they will spend an average of 2.5 years in a skilled nursing facility. A one-year stay in a nursing home can cost between $30,000 and $80,000.

 

Acute and Critical Care Facilities: Although there has been a decline in the number of hospitals that provide acute care services in the United States, there is an estimated 5,200 medical facilities and the total numbers of acute care facilities and out-patient surgery centers have increased annually. This shift was in part the result of payer pricing pressures, declining physician reimbursements, and this has t created an incentive for acute care hospitals to lower-costs and to establish physician-owned, out-patient surgery centers.

 

Assisted Living Facilities: There are approximately 33,000 Assisted Living Facilities operating in the U.S. today. Nursing home spending is expected to grow 6.6 percent annually by 2018.

Hospitals and Medical Institutions: There are well over 5,000 hospitals in the U.S. with approximately 1,000,000 beds. Although the short-term outlook for hospitals is mixed, a common theme is to reduce the total cost of care, improve efficiencies and allow patients to remain in their home with home based care as long as possible.

 

Federal Agencies: In fiscal year 2008, the Department of Veterans Affairs (VA) spent about $4.1 billion on long-term care for veterans. The VA estimated a budget increase of 165% between fiscal years 2008 and 2015 for institutional and non-institutional care.

 

Home Medical Care Industry: It is estimated that in 2010 there were over 30,000 home health care facilities in the United States. Home health care spending is projected to grow an average of 7.9 percent from 2013 to 2018.

 

Stroke Centers: There are an estimated 500 stroke centers throughout the United States.

 

Burn Centers: There are an estimated 120 burn centers throughout the United States.

 

Physical/Occupational Therapy Centers: There are well over 5,000 physical therapy facilities throughout the United States. The demand for physical therapists is expected grow by 30% over the next decade.

 

 

Medicare Competitive Bidding Areas

 

Esteemcare was awarded contracts in 46 Competitive - MSA Bid Areas.

 

Product Category: CPAP Devices, Respiratory Assist Devices, and Related Supplies

 

Major MSA Markets Awarded By Company:

 

Albany-Schenectady-Troy, NY , Albuquerque, NM ,Asheville, NC ,Atlanta-Sandy Springs-Marietta, GA Augusta-Richmond County, GA-SC ,Baton Rouge, LA , Bridgeport-Stamford-Norwalk, CT ,Bronx-Manhattan, NY ,Cape Coral-Fort Myers, FL , Charleston-North Charleston-Summerville, SC ,New Haven-Milford, CT ,New Orleans-Metairie-Kenner, LA ,North East NY CBA Metro ,North Port-Bradenton-Sarasota, FL ,Northern NJ Metro CBA ,Ocala, FL , Oklahoma City, OK ,Omaha-Council Bluffs, NE-IA , Palm Bay-Melbourne-Titusville, FL ,Phoenix-Mesa-Glendale, AZ ,Poughkeepsie-Newburgh-Middletown, NY Raleigh-Cary, NC ,Colorado Springs, CO, Columbia, SC ,Deltona-Daytona Beach-Ormond, FL ,Denver-Aurora-Broomfield, CO, Greensboro-High Point, NC , Greenville-Mauldin-Easley, SC ,Hartford-West Hartford-East Hartford, CT, Jacksonville, FL ,Lakeland-Winter Haven, FL ,Milwaukee-Waukesha-West Allis, WI, Minneapolis-St. Paul-Bloomington, MN-WI, Nassau-Brooklyn-Queens-Richmond County Metro Richmond, VA ,Seattle-Tacoma-Bellevue, WA ,Southern NY Metro CBA

 

Medicare Competitive Bidding Area Awards

 

Suffolk County, Syracuse, NY ,Tampa-St. Petersburg-Clearwater, FL ,Tucson, AZ ,Tulsa, OK Virginia Beach-Norfolk-Newport News, VA-NC , Washington-Arlington-Alexandria, DC-VA-MD-WV

 

Esteemcare revenues are derived from physician referrals, sleep centers, patient referrals, in-service set-ups, and by supplying CPAP products and supplies to meet the growing requirements to combat severe/chronic sleep disorders. Customers meet with company Respiratory Technicians and our therapists provide the appropriate CPAP device to the customer. We market our products directly to referral physicians, insurance payers, and consumers through our direct push marketing efforts. We target consumers with chronic sleep obstructive conditions and who require a continuous supply of medical products that provide attractive gross margins.

 

We receive initial contact from prospective customers in the form of physician prescriptions. These referrals are then qualified and become new customers. Our qualification efforts primarily involve verifying insurance eligibility, obtaining the required medical documentation from the customer’s physician, and explaining our billing and collection processes, if applicable. The majority of the new customers qualified from our process typically place their initial order with us within 24 -48 hours from the time we receive initial contact from the physician and customer. Since our inception, we have demonstrated our ability to attract and retain customers with our unique customer service that generates recurring revenues on supply parts that can last for periods of greater than two years.

 

Accounts Receivable

 

Our accounts receivable are generally due from Medicare, Medicaid, private insurance companies, and our private patients. Accounts receivable are reported net of allowances for contractual adjustments and uncollectible accounts. The collection process is time consuming, complex and typically involves the submission of claims to multiple layers of payers whose payment of claims may be contingent upon the payment of another payer. As a result, our collection efforts may be active for up to 18 to 24 months from the initial billing date. In accordance with regulatory requirements, we make reasonable and appropriate efforts to collect our accounts receivable, including deductible and co-payment amounts, in a manner consistent for all classes of payers.

 

The Company has established an allowance to account for contractual adjustments that result from differences between the payment amount received and the expected realizable amount. These adjustments are recorded as a reduction of both gross revenues and accounts receivable. Based on our current billing system, we are unable to directly compare the aggregate estimated allowance for contractual adjustments to the actual contractual adjustments recorded. However, we do analyze the aggregate allowance for contractual adjustments as a percentage of net sales compared to the last twelve months’ actual contractual adjustments as a percentage of net sales to determine that our estimated allowance for contractual adjustments is a reasonable basis for recording our periodic allowance for contractual adjustments.

 

As a result of the Budget Control Act of 2011, or sequestration, effective April 1, 2013, Medicare reduced payments for Part B Medicare claims by 2%, but did not change the published allowable Medicare rates. Allowances for uncollectible accounts (or bad debts) are recorded as an operating expense and consist of billed charges that are ultimately deemed uncollectible due to the customer’s or third-party payer’s inability or refusal to pay. In establishing the appropriate allowance for uncollectible accounts, management makes assumptions with respect to future collectability. We base our estimates of accounts receivable collectability on our historical collection and write-off experience, our credit policies, and aging of our accounts receivable. Changes in judgment regarding these factors will cause the level of accounts receivable allowances to be adjusted.

 

The typical collection process begins with the electronic submission of a claim to Medicare, Medicaid, or other primary insurance carriers, for which a response (and payment) is obtained within 15 to 30 days. Any claim denials are generally acted upon timely following the response and, where applicable, corrected claims are submitted. A response (and co- payment) for amounts billed to secondary payers, including Medicaid, private third-party insurance carriers, and patients, generally occurs within 30 to 60 days of submission of the claim. On a continual basis, the outstanding accounts receivable balances are reviewed by collection personnel, including contacting the insurance company and/or patient in an attempt to determine why payment has not been remitted and obtain payment from the respective responsible party. When applicable, corrected claims are submitted to the insurance carrier. Patient statements are generated and sent out monthly. Outbound calls are continually made to patients with outstanding balances in an attempt to obtain payment. Uncollectible account balances for all payer classes are written off after remaining unpaid for a period of 24 months. Balances that are determined to be uncollectible prior to the passage of 24 months from the last billing date are written off at the time of such determination.

 

We perform eligibility and insurance verification on patients prior to the shipment of products and submission of a claim. As a result, we do not have amounts that are pending approval from third-party payers outside of the typical review process for submitted claims.

 

Accounts receivable are reported net of allowances for contractual adjustments and uncollectible accounts. Contractual adjustments are recorded against revenues. Contractual adjustments result from differences between the payment amount received and the expected realizable amount. Bad debt is recorded as an operating expense and consists of billed charges that are ultimately deemed uncollectible due to the customer’s or third-party payer’s inability or refusal to pay.

 

The Company performs analyses to evaluate the net realizable value of accounts receivable. Specifically, the Company considers historical realization data, accounts receivable aging trends, other operating trends and relevant business conditions. Because of continuing changes in the health care industry and third-party reimbursement, it is possible that the Company’s estimates could change, which could have a material impact on the Company’s results of operations and cash flows. The Company does not accrue interest on its accounts receivable.

 

Revenue Recognition

 

We recognize revenue related to product sales upon delivery to customers provided that we have received and verified any written documentation required to bill Medicare, other government agencies, third-party payers, and patients. For product shipments for which we have not yet received the required written documentation, revenue recognition is delayed until the period in which those documents are collected and verified. We record revenue at the amounts expected to be collected from government agencies, other third-party payers, and from patients directly. We record, if necessary, contractual adjustments equal to the difference between the reimbursement amounts defined in the fee schedule and the revenue recorded per the billing system. These adjustments are recorded as a reduction of both gross revenues and accounts receivable. We analyze various factors in determining revenue recognition, including a review of specific transactions, current Medicare regulations and reimbursement rates, historical experience and the credit-worthiness of patients. Medicare reimburses at 80% of the government-determined prices for reimbursable supplies, and we bill the remaining balance to either third-party payers or directly to patients.

 

Company Payer Mix:

 

Medicare- 40%

Private Insurance- 26%

Blue Cross/Blue Shield of South Carolina- 17%

Private Pay 8%

Tricare/VA- 7%

Medicaid- 2%

 

Product Mix:

 

Sleep 95%- Oxygen 5%

 

 

Shipping and Handling Costs:

 

Shipping and handling costs are not charged to the patients in compliance with Medicare policy.

 

Equipment Leases

 

The Company performs a review of newly acquired equipment leases to determine whether a lease should be treated as a capital or operating lease. Capital lease assets are capitalized and depreciated over the term of the initial lease. A liability equal to the present value of the aggregated lease payments is recorded utilizing the stated lease interest rate. If an interest rate is not stated, the Company will determine an estimated cost of capital and utilize that rate to calculate the present value. For equipment leases, the Company records rent expense and amortization of leasehold improvements on a straight-line basis over the initial term of the lease.

 

Operating Leases

 

The Company leases various software, and equipment under non-cancelable operating leases that expire at various times that extend through April 2016.

 

Facilities

 

The Company operates from two (2) administrative locations: Columbia South Carolina, a 1,800 square foot commercial building and Charleston, South Carolina, a 1,200 square foot commercial building. The business leases are on month-to-month lease agreement with monthly lease payments below market average.

 

Employees

 

As of September 25, 2014, Esteemcare has ten (10) full time employees, one (1) Office Manager, three (3) billing personnel, two (2) Respiratory Technicians, one (1) accounting manager, one (1) delivery person, the Chief Financial Officer and the President. None of these employees are covered by any collective bargaining agreement. The Company presently considers its employee relations to be satisfactory.

 

Proprietary Rights

 

We have entered into an Employment Agreement with our President, Key Managers and have executed Non-Circumvent and Non-Disclosure agreements with key employees that require them to keep all of our proprietary information and customers lists confidential. We cannot assure that such protections will prove adequate should they be challenged in litigation.

 

Legal Proceedings

 

From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. There are currently no such pending proceedings to which we are a party that our management believes will have a material adverse effect on the Company’s financial position or results of operations. However, future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods.

 

Physicians Referrals- Customers

 

The Company's financial success is directly related to maintaining the continued relationships with referring physicians and delivering a high excellence of personal care and services to our clients and the willingness of new physicians and qualified clients to accept our organization as the “Preferred Choice” to provide the CPAP equipment and respiratory supplies with the highest level of personal care.

 

ITEM 5.02 – Appointment of Certain Officers; Compensatory Arrangements of Certain Officer

 

Pursuant to the Agreement, Harold Halman was appointed President and Chief Operating Officer of Esteem, Michael A. Kramarz our current Chief Financial Officer of Oncologix Tech, Inc., was also appointed CFO and Roy Wayne Erwin, Our current Chief Executive Officer was appointed CEO.

 

Harold Halman- President/COO- Medical Product & Technology Division- Mr. Halman brings 20+ years of new business development, medical sales, marketing and operations experience to OCLG. Prior to joining the company, Harold was the Chief Executive Officer for Global Medical located in Phoenix, Arizona, a national provider for home medical equipment. Mr Halman has vast knowledge and direct industry experience in medical devices and home medical products that will accelerate expansion within the company’s Medical Products and Technology Division both domestically and internationally. Prior to Global Medical, Mr. Halman was CEO of his management consulting firm involved in M&A, business turnarounds and business development projects. His direct experience includes bringing forth breakthrough medical products and technologies to the market with aggressive, multi-tiered distribution strategies.

 

Roy Wayne Erwin- Chairman and CEO, has served as the Chairman/CEO of Oncologix Tech Inc. since March 2013, and played an important role in the acquisitions of Dotolo Research Corporation and Amian Angels Inc. Since 2010, Wayne Erwin has been the Chief Executive Officer of Deep South Capital, LLC., a company with very limited operations. From 2007 to 2010, Mr. Erwin was the co-founder and Chief Operations Officer of Electronic Health Network, a leader in Healthcare and Medical Information Technology. From 2007 to 2004 he was the Chief Operating Officer and Director of New Business Development at Crossroads Regional Hospital, a 68-bed, acute care, in-patient and outpatient psychiatric and Substance Abuse Facility. From 1995 to 2004, Mr. Erwin was the Regional Director of Sales for Centerpulse Orthopedics, Inc, a Division of Sulzer Corporation, a world-wide, $ 3.0 billion Swiss conglomerate specializing in orthopedic total joint reconstruction of hip, knees and shoulder products. Prior to 1995, Mr. Erwin was employed by Valley Lab, Inc., Ball Aerospace and Texas Instruments in various senior management capacities. He served in the US Army, with the rank of Captain, at the 101st Airborne Division, with overseas assignments in Panama and Honduras and has advanced military training in Air Borne, Air Assault, and Jungle Warfare training. Wayne graduated with a Bachelor of Science from Louisiana College- Pineville, Louisiana.

 

Michael A. Kramarz- has served as Chief Financial Officer of the Company since July 15, 2004. Mr. Kramarz was first employed by the Company in September 2002, as its Controller and now has over 18 combined years working for public companies. Mr. Kramarz is responsible for all financial statement, accounting, SEC compliance, payroll and tax functions. From 1995 to 2002, Mr. Kramarz was employed as Accounting Manager for Assurant Group, a 6 billion dollar insurance company. Mr. Kramarz was responsible for the accounting, budgeting and payroll functions of one of Assurant Group’s 20+ million dollar call center subsidiaries with offices in Michigan and Oklahoma. In addition, Mr. Kramarz was responsible for quarterly consolidations into the parent company to assist with its SEC and tax filings. From 1992 to 1995, Mr. Kramarz was a staff accountant at VandenToorn & Associates CPA firm where he was responsible for compilations and reviews of financial statements, as well as tax return preparation. Mr. Kramarz holds a Certified Management Accountant Designation (CMA) and a Certified Public Accountant Designation (CPA). Mr. Kramarz holds a Bachelor of Science and Business Administration in Accounting from Aquinas College and a Masters in the Science of Taxation from Grand Valley State University.

 

Barry Griffith- Board of Directors Barry been a Director of the company since December of 2004. Mr. Griffith brings 20 years of early stage and upstart medical device company experience to Oncologix. Mr. Griffith has been involved in the introduction of novel medical devices in the Orthopedic, Vascular, Neurological and Cancer markets for companies such as Mitek, Schneider, Novoste and Medtronic. His present position is founder and principal of The Bench which is and executive search firm within the medical device industry based out of Newport Beach Ca. Prior to that, he was Director of Sales with Cardiovascular Systems, Inc., Director of Sales for Calypso Medical Technologies and held the Western Area Director roles with Novoste and Isoray.

 

Vickie Hart- President- Amian Angels Services Division. Ms. Hart is the President of Angels of Mercy and brings over 35 years of senior management and healthcare services experience. Since 2011 through 2013, she was the Owner and President of Triple E Healthcare Services, a healthcare services consulting firm located in Alexandria, Louisiana. From 1992 through 2010, Ms. Hart was an Assistant Principal and teacher in Elementary and Secondary education for the Rapides Parish School Systems. Ms. Hart is active in civic and charitable organizations, recently served on the D.A.R.E. Board of Directors, Central Louisiana Lions Club, and the local United Way. Vickie Hart holds a Bachelor of Science Degree from Louisiana State University and a Master Degree in Management from Northwestern State University, Natchitoches, Louisiana.

 

ITEM 9.01 – Financial Statements and Exhibits

 

(a)

Financial Statements of Business Acquired

 

To be filed by amendment.

 

(b)

Pro Forma Financial Information

 

To be filed by amendment.

 

(c)

Exhibit

(d)

Exhibit 10.1: Amendment to Credit Agreement Exhibit 10.2: Stock Purchase Agreement Exhibit 10.3: Secured Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Dated: October 1, 2014
	ONCOLOGIX TECH, INC.
	By: /s/ Roy Wayne Erwin
	Roy Wayne Erwin, Chief Executive Officer
	By:      /s/ Michael A. Kramarz
	Michael A. Kramarz, Chief Financial Officer

 

Exhibit 10.1

AMENDMENT NO. 1
TO
SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT
IN THE AMOUNT OF US$4,000,000
BY AND AMONG

ONCOLOGIX TECH, INC.,
as Borrower,

AMIAN ANGELS, INC.,

DOTOLO RESEARCH CORPORATION,
ESTEEMCARE INC.,
AFFORDABLE MEDICAL EQUIPMENT SOLUTIONS, INC.,
as Joint and Several Guarantors,

AND

TCA GLOBAL CREDIT MASTER FUND, .LP,
as Lender

September 25, 2014

 

 

AMENDMENT NO. 1 TO

SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT

THIS AMENDMENT NO. 1 TO SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment”) is dated and effective as of September 25, 2014 (the "Effective Date”), by and among (i) ONCOLOGIX TECH, INC., a corporation incorporated under the laws of the State of Nevada (the "Borrower”), (ii) AMIAN ANGELS, INC., a corporation incorporated under the laws of the State of Louisiana and formerly known as Angels of Mercy, Inc. ("Amian”), DOTOLO RESEARCH CORPORATION, a corporation incorporated under the laws of the State of Louisiana, ESTEEMCARE INC., a corporation incorporated under the laws of the State of South Carolina ("Esteemcare”), AFFORDABLE MEDICAL EQUIPMENT SOLUTIONS, INC., a corporation incorporated under the laws of the State of Florida ("Affordable Medical”), and any Person to hereafter become a Subsidiary of the Borrower pursuant to Section 3.4 hereof, as joint and several guarantors (together, jointly and severally, the "Guarantors” and together with the Borrower, the "Credit Parties”), and (iii) TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands, as lender (the "Lender”).

WITNESSETII

WHEREAS, the Credit Parties and .Lender have entered into that certain senior secured revolving credit facility agreement, dated as of November 30, 2013 and effective as of January 3, 2014 (the "Credit Agreement”), pursuant to which the Lender agreed to make available to the Borrower a secured revolving loan in the amount of up to Four Million and No/100 United States Dollars (US$4,000,000), subject to the terms and conditions therein contained, and of this amount, the Lender made an initial principal advance of Five Hundred Thousand and No/100 United States Dollars (US$500,000) to the Borrower;

WHEREAS, as of the date hereof, a total aggregate principal amount of approximately Five Hundred Thousand and No/100 United States Dollars (US$500,000) of principal plus applicable interest and fees are outstanding;

WHEREAS, in connection with this Amendment, the Borrower has requested and the Lender has agreed to advance an additional principal amount of One Million Two Hundred Thousand and No/100 United States Dollars (US$1,200,000) to the Borrower for acquisition funding and working capital financing for Borrower and for any other purposes permitted under the Credit Agreement, as amended hereby;

WHEREAS, the parties to this Amendment desire to amend the Credit Agreement (as amended hereby, the "Amended Credit Agreement”), as set forth herein.

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Defined Terms. Unless otherwise defined herein, the capitalized terms used herein shall have the meanings assigned to such terms in the Credit Agreement.

 

 

 

 

 

 

  

 

2. Amendment of the Credit Agreement. Subject to the terms and conditions of this Amendment, the Credit Agreement is hereby amended and supplemented as follows:

(a)           all references to the "Senior Secured Revolving Credit Facility Agreement” or the "Agreement” contained in the Credit Agreement shall be deemed to refer to the Credit Agreement as further amended hereby and all references to the "Credit Parties” in the Agreement shall mean the Credit Parties defined in the Preamble to this Amendment;

(b)           The definitions of "Revolving Loan Commitment” and "Revolving Loan Maturity Date” shall be deleted in their entirety and shall be replaced with the following:

".Revolving Loan Commitment” shall mean One Million Seven. Hundred Thousand and No/100 United States Dollars (US$1,700,000), and in the event Borrower requests and Lender agrees to increase the Revolving Loan Commitment pursuant to Section 2.1(b), such aggregate additional amount up to Four Million and No/100 United States Dollars (US$4,000,000).

".Revolving Loan Maturity Date” means the earlier of (i) September 25 2015, (b) upon prepayment of all of the then outstanding Revolving Notes by the Borrower in full, or (c) the acceleration of all of the then outstanding Revolving Notes pursuant to this Agreement.

(c)           Section 2.1(d)(i) shall be deleted in its entirety and shall be replaced with

the following:

Mandatory Principal Repayments; Overadvances. From and after December 25, 2014, and continuing until the Revolving Loan Maturity Date, an amount equal to twelve and five tenths percent (12.5%) of all amounts deposited into the Lock Box Account (in excess of any recurring fees owed under Section 2.2, fees owed to any custodian/back-up servicer, the Receipts Collection Fee, and interest owed under Sections 2.1(c) and 2.4) shall be held by the Lender (the "Holdback”) and credited toward the outstanding principal balance of all Revolving Loans hereunder on any Payment Date (the "Mandatory Principal Repayment Amount,). All Revolving Loans hereunder shall be repaid by Borrower on or before the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement. In the event the aggregate outstanding principal balance of all Revolving Loans hereunder exceed the Revolving Loan Availability, Borrower shall, upon notice or demand from I,ender, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to eliminate such excess.

 

 

(d)           Section 2.1(d)(ii) shall be deleted in its entirety and shall be replaced with

 

 

 

the following:

Optional Prepayments. From time to time, the Borrower may prepay all amounts then outstanding under the Revolving Loan, in whole or in part, without penalty or premium. The Borrower acknowledges and agrees that if prepayment is made in whole, all amounts then owed to the Lender pursuant to the Advisory Fee shall be paid in full in cash at the time of such prepayment. Upon receipt of payment in full of all then outstanding amounts under the Revolving Loan, including the Advisory Fee, Lender shall release all Guaranty Agreements and release its lien on all assets of the Credit Parties. The Lender agrees to file all applicable documentation, including without limitation, all UCC-3 statements, to effectuate such release of all such liens.

 

(e)           Section 2.1(e)(i) shall be amended by adding the following as the final sentence in such Section:

Notwithstanding anything contained in this sub-section to the contrary the Lender shall not apply any amounts deposited in the Lock. Box Account toward the payment of principal until after December 25, 2014, provided however, that upon the occurrence of an Event of Default that has not been cured by the Borrower or waived by the Lender, the Lender shall have the rights and remedies set forth in Section 12 of this Agreement.

(f)           Section 9.10 shall be amended by deleting the first sentence thereof in its entirety and replacing it with the following:

 

The Lender shall be permitted to conduct a field examination of the assets and records of the Borrower and its Subsidiaries at any time during normal business hours and without interference with the business of the Credit Parties, the results of which must be satisfactory to Lender in Lender's sole and absolute discretion. In addition to any fees contained in this Agreement, the Credit Parties shall pay the Lender fees associated with such field examinations in an amount equal to Two Thousand Five Hundred and No/100 United States Dollars (US$2,500) per calendar quarter, commencing on October 1, 2014 and continuing on the first day of each calendar quarter thereafter. Fees provided pursuant to this Section shall be due and owing notwithstanding the actual occurrence of a field examination.

 

(g)           Section 9.21 shall be deleted in its entirety and replaced with the following:

 

Dissolution of Subsidiaries. The Borrower shall cause, by no later than October 25, 2014, any Subsidiary which has not executed a counterpart to this Agreement as a Credit Party to be dissolved and shall provide evidence of same to the Lender, which such evidence shall be satisfactory to Lender in its sole and absolute discretion.

 

 

(h)          Section 9.22 shall be added as follows:

Security Interest. The Borrower shall cause, by no later than. February 28, 2015, On Deck Capital and Everest Business Funding to remove any and all liens filed against Amian.

 

      Section 11.15 shall be added as follows:

Lock Box Account. (i) The determination in good faith by the Lender that there has been a failure to perform or default in the performance by a Credit Party of Section 2.1(e) or (ii) the failure of the Borrower to cause sufficient funds to be on deposit in the Lock Box Account to permit the Lender to withdraw payments at any such time payments are due to Lender by Borrower pursuant hereto

(j)          Section 10.1 shall be amended by deleting Section 10.1 in its entirety and replaced by the following;

Positive EBITDA. Commencing at end of the first calendar quarter of 2015, Borrower shall at all times cause a positive EBITDA to be maintained.

(k)          Section 10.2 shall be amended by deleting Section 10.2 in its entirety and replacing it with the following:

Revenue Covenant. Commencing at the end of fourth calendar quarter of 2014, for each calendar quarter while this Agreement remains in effect, Borrower shall have sales revenues that are not less than seventy-five (75%) percent of the sales revenues shown on the most recent of the Financial Statements.

(l)          Section 13.19 shall be amended by replacing the Lender's address and contact information with the following:

 

TCA Global Credit Master Fund, LP 3960 Howard Hughes Parkway, Suite 500 Las Vegas, NV 89169 Attention: Robert Press Facsimile: (973) 807-1813

 

3. Renewal of Revolving Loan. Pursuant to Section 2.3 of the Amended

Credit Agreement, by its execution hereof, the Borrower hereby provides written notice to Lender of Borrower's election to renew the Revolving Loan Commitment and extend the Revolving Loan Maturity Date for an additional twelve (12) month period commencing on the Effective Date hereof and terminating on September 25, 2015 (subject to the terms and conditions of the Credit Agreement, as amended hereby) and, by its execution hereof, the Lender hereby consents and agrees to such renewal and extension.

4. Issuance of Amended and Restated Promissory Note. Subject to the terms and conditions of this Amendment, the Borrower shall and does hereby agree to issue to the Lender, simultaneously with the execution of this Amendment, an original amended and restated promissory note in the principal amount of One Million Seven Hundred Thousand and No/100 United States Dollars (US$1,700,000), dated as of the Effective Date, in the form attached hereto as Exhibit A (the "Amended and Restated Promissory Note”).

5. Cancellation of Existing Promissory Note. By the Credit Parties' execution and delivery to the Lender of the Amended and Restated Promissory Note, that certain promissory note originally issued by the Borrower in favor of the Lender, dated as of November 30, 2013 and effective as of January 3, 2014, in the original principal amount of Five Hundred Thousand and No/100 United States Dollars (US$500,000) shall be hereby immediately and irrevocably cancelled without further action on the part of the Lender or the Borrower. It is the intention of the parties that while the Amended and Restated Promissory Note amends, restates, replaces and supersedes the existing promissory note, in its entirety, the issuance of the Amended and Restated Promissory Note is not in payment or satisfaction of the existing promissory note, but rather is the substitute of one evidence of debt for another without any intent to extinguish the existing debt.

6. Representations and Warranties of the Credit Parties. The Credit Parties represent and warrant to the Lender that immediately after giving effect to this Amendment, the representations and warranties of the Credit Parties set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects (except to the extent such representation or warranty expressly relates to an earlier date) and no Default or Event of Default shall have occurred and be continuing.

7. Security Interest Confirmation. The Credit Parties each hereby represent, warrant and covenant that (i) the Lender's security interests in all of the "Collateral” (as such term is defined in each Security Agreement executed by each of the Credit Parties in connection with the Credit Agreement) are and remain valid, perfected, security interests in such Collateral, (ii) the additional principal amount advanced by the Lender in connection with this Amendment and any and all additional obligations incurred by the Credit Parties in connection therewith constitute Obligations (as defined in the Credit Agreement) and such additional principal amount and additional obligations are each secured by Lender's security interests in all of the Collateral, and (iii) the Credit Parties have not granted any other encumbrances or security interests of any nature or kind in favor of any other Person affecting any of such Collateral, other than Permitted Liens.

8. Ratification. The Credit Parties hereby acknowledge, represent, warrant and confirm to Lender that: (i) each of the Loan Documents executed by the Credit Parties are valid and binding obligations of the Credit Parties, enforceable thereagainst in accordance with their respective terms; (ii) all obligations of the Credit Parties under all the Loan Documents are, shall be and continue to be secured by and under the Security Agreements, the Guaranty Agreements, the UCC Financing Statements, and all other Loan Documents; (iii) there are no defenses, setoffs, counterclaims, cross-actions or equities in favor of the Credit Parties to or against the enforcement of any of the Loan Documents, and to the extent the Credit Parties have any defenses, setoffs, counterclaims, cross-actions or equities against the Lender and/or against the enforceability of any of the Loan Documents, the Credit Parties acknowledge and agree that same are hereby fully and unconditionally waived by the Credit Parties; and (iv) no oral representations, statements, or inducements have been made by Lender or any agents or representatives of the Lender with respect to any of the Loan Documents.

9. No Defaults. Each Credit Party hereby represents and warrants that as of the date hereof there exists no Event of Default or any condition which, with the giving of notice or passage of time, or both, would constitute an Event of Default. The Lender hereby acknowledges and agrees that, to its knowledge, as of the date hereof there exists no Event of Default.

10. Covenants. Each Credit Party hereby reaffirms that it has duly performed and observed the covenants and undertakings set forth in the Credit Agreement and each. Loan Document, and covenants and undertakes to continue to duly perform and observe such covenants and undertakings, as amended hereby, so long as the Credit Agreement, as amended hereby, shall remain in effect.

11. No Other Amendment. All other terms and conditions of the Credit Agreement shall remain in full force and effect and the Credit Agreement shall be read and construed as if the terms of this Amendment were included therein by way of addition or substitution, as the case may be.

12. Second Tranche Advisory Shares; Advisory Fee.

(a)      The Borrower hereby agrees to pay to the Lender, on the date hereof, a fee for corporate advisory and investment banking services in an aggregate amount equal to Four Hundred Fifty Thousand and No/100 United States (US$450,000.00) Dollars (the "Advisory Fee”).. At the Borrower's option, the Advisory Fee may also be converted into shares of Preferred Stock (the "Second Tranche Advisory Shares”) on or after March , 2015 (such conversion date shall be deemed the "Conversion Date”). The conversion price will be equal to the closing stock price of the Borrower's stock on the Conversion Date. The Advisory Fee will be due in full in cash on the earlier of September , 2015 or the date on which prepayment in full of the Revolving Loan is made in accordance with Section 2.1(d)(ii) above. If the Borrower converts the Advisory Fee into The Second Tranche Advisory Shares, the Borrower shall issue certificates representing the Second Tranche Advisory Shares immediately upon the Conversion Date. In the event such certificates representing the Second Tranche Advisory Shares issuable hereunder shall not be delivered to the Lender within three (3) Business .Days of the Conversion Date, the Borrower shall be in immediate default under this Amendment, the Credit Agreement and the Loan Documents. The Second Tranche Advisory Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower's Preferred Stock. The Second Tranche Advisory Shares shall be deemed fully earned in connection with the Advisory Fee.

(b)      Adjustment to Second Tranche Advisory Shares. In the event that the Advisory Fee is converted to Second Tranche Advisory Shares, it is the intention of the Borrower and Lender that the Lender shall generate Net Proceeds from the sale of the Second Tranche Advisory Shares equal to the Advisory Fee (less any amounts paid in connection with the Advisory Fee prior to such sale). For purposes of this Section, the term "Net Proceeds” shall mean the (i) gross proceeds from the sale of the Second Tranche Advisory Shares in the Principal Trading Market, less (ii) customary broker fees. The Lender shall have the right to sell the Second Tranche Commitment Shares in the Principal Trading Market or otherwise, at any time in accordance with applicable securities laws. Within three (3) Business Days after the sale of the Second Tranche Advisory Shares, the Lender shall deliver to the Borrower a reconciliation statement showing the Net Proceeds actually received by the Lender from the sale of the Second Tranche Advisory Shares (the "Sale Reconciliation”). If, as of the date of the delivery by Lender of the Sale Reconciliation, the Lender has not realized Net Proceeds from the sale of such Second Tranche Advisory Shares equal to at least the Advisory Fee (less any amounts paid to the Lender in connection with the Advisory Fee prior to such sale), as shown on the Sale Reconciliation, then the Borrower shall immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock, in the Lender's sole discretion, to the Lender in an amount sufficient such that, when sold and the Net Proceeds thereof are added to (A) the Net Proceeds from the sale of any of the previously issued and sold Second Tranche Advisory Shares and (B) all other amounts delivered to the Lender in payment of the Advisory Fee, the Lender shall have received total funds equal to the Advisory Fee. If additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock in accordance with the terms of this Section 2.2(i), the Lender still has not received Net Proceeds equal to the Advisory Fee, less (A) the Net Proceeds from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other amounts delivered to the Lender in payment of the Advisory Fee, then the Borrower shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock, in the Lender's sole discretion, to the Lender as contemplated above, and such additional issuances shall continue until the Lender has received Net Proceeds from the sale of such. Common Stock equal to the Advisory Fee, less (A) the Net Proceeds from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other cash amounts delivered to the Lender in payment of the Advisory Fee. Upon receipt of the Advisory Fee in full, if the Lender still has Second Tranche Advisory Shares remaining to be sold, the Lender shall return all such remaining Second Tranche Advisory Shares to the Borrower within three (3) Business Days after receipt of the Advisory Fee. In the event additional Common Stock is required to be issued as outlined above, the Borrower shall instruct its Transfer Agent to issue certificates representing such additional shares of Common Stock to the Lender immediately subsequent to the Lender's notification to the Borrower that additional shares of Common Stock are issuable hereunder, and the Borrower shall in any event cause its Transfer Agent to deliver such certificates to Lender within three (3) Business Days following the date Lender notifies the Borrower that additional shares of Common Stock are to be issued hereunder. In the event such certificates representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Lender within said three (3) Business Day period, same shall be an immediate default under this Agreement and the Loan Documents. Notwithstanding anything contained in this Section to the contrary, at the time at which the Second Tranche Advisory Shares become unrestricted pursuant to applicable securities laws, the Borrower shall have the right, at any time during such period, to redeem any Second Tranche Advisory Shares then in the Lender's possession for an amount payable by the Borrower to Lender in cash equal to the Advisory Fee, less (A) the Net Proceeds from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other cash amounts delivered to the Lender in payment of the Advisory Fee. Upon Lender's receipt of such cash payment in accordance with the immediately preceding sentence, the Lender shall return any then remaining Second Tranche Advisory Shares in its possession back to the Borrower and otherwise undertake any required actions reasonably requested by Borrower to have such then remaining Second Tranche Advisory Shares returned to Borrower.

(c)      Mandatory Redemption. Notwithstanding anything contained herein to the contrary, in the event that the Borrower converts the Advisory Fee into the Second Tranche Advisory Fee Shares and the Lender has not realized Net Proceeds from the sale of Second Tranche Advisory Shares equal to the amount of the Advisory Fee (including (A) Net Proceeds received from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other cash amounts delivered to the Lender in payment of the Advisory Fee), by the Revolving Loan Maturity Date, then the Borrower shall redeem, on the Revolving Loan Maturity Date, all Second Tranche Advisory Shares then in Lender's possession for cash equal to the amount of the Advisory Fee less (A) the Net Proceeds from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other cash amounts delivered to the Lender in payment of the Advisory Fee. The Borrower shall redeem the then remaining Second Tranche Advisory Shares in Lender's possession for an amount equal to the Advisory Fee less (A) the Net Proceeds from the sale of previously issued and sold Second Tranche Advisory Shares and (B) all other cash amounts delivered to the Lender in payment of the Advisory Fee. Such amount shall be payable by wire transfer to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption notice to the Borrower. In the event of any conversion of the Advisory Fee to Second Tranche Advisory Shares, such conversion shall be subject to the "Beneficial Ownership Limitations” described in the Amended and Restated Note. Nothing in this section shall in any way limit the Borrower's affirmative obligation to pay the Advisory Fee in cash on the earlier of September , 2015 or the date on which prepayment in full of the Revolving Loan is made in accordance with Section 2.I(d)(ii) above.

(d)        Piggyback Registration Rights. In the event that the Borrower files a registration statement with respect to its Common Stock with the SEC (other than a registration statement on Form S-4 or S-8 or any successor form thereto) after the Effective Date but before the Lender sells the Second Tranche Advisory Shares, the Second Tranche Advisory Shares shall be registered pursuant to such registration statement.

(e)         Reporting Requirement. In addition to any remedies which may be available hereunder or in the Credit Agreement, upon each occurrence of Borrower's failure to timely comply with the reporting requirements contained in Section 9.7 of the Credit Agreement, to the extent that any Second Tranche Advisory Shares remain in Lender's possession, Borrower agrees to immediately pay in cash a portion of the Second Tranche Advisory Shares equal to two and one half of one percent (2.5%) of the Second Tranche Advisory Shares remaining in Lender's possession upon each instance of Borrower's failure to comply with such reporting requirements within five (5) days of when due under the terms of Section 9.7.

13. Fees and. Expenses. The Borrower agrees to pay to the Lender, upon the execution hereof, (i) a commitment fee equal to Twenty-Four Thousand and No/100 United States Dollars (US$24,000), (ii) a legal fee equal to Ten Thousand and No/100 United States Dollars (US$10,000), (iii) a due diligence fee equal to Seven Thousand Five IIundred and No/100 United States Dollars (US$7,500), (iv) an asset monitoring fee equal to Two Thousand and No/100 United States Dollars ($2,000), (v) all costs and expenses of the Lender and Lender's counsel in connection with the preparation and execution of this Amendment, including, but not limited to, documentary stamp tax fees, UCC-1 Financing Statement search fees and filing fees, and Certificate of Good Standing fees. The Lender and the Borrower agree that all fees payable by the Borrower to the Lender upon the execution hereof shall be listed on the closing statement executed in connection herewith.

14. Conditions Precedent. The effectiveness of this Amendment and the obligation that the Lender to advance the additional principal amounts provided herein shall be expressly subject to the following conditions precedent:

(a)      Amendment. Each Credit Party shall have executed and delivered to the Lender a copy of this Amendment;

(b)      Amended and Restated Promissory Note. Each Credit Party shall have executed and delivered to the Lender the Amended and Restated Promissory Note in the principal amount of One Million Seven I Iundred Thousand and No/100 United States Dollars (US$1,700,000), dated as of the Effective Date;

(c)      Confession of Judgment. Each Credit Party shall have executed and delivered to the Lender a copy of a Confession of Judgment, dated as of the Effective Date, in the form attached hereto as Exhibit B;

(d)      Use of Proceeds Confirmation. The Borrower shall have executed and delivered to the Lender a copy of a Use of Proceeds Confirmation, including a copy of the Borrower's twelve (12) month financial projections attached as an exhibit thereto, dated as of the Effective Date, in the form attached hereto as Exhibit C;

(e)      Security Agreement. Esteemcare and. Affordable Medical shall have each have executed and delivered to the Lender a copy of a Security Agreement, dated as of the Effective Date, in the form attached hereto as Exhibit D;

(f)       Guaranty Agreement. Esteemcare and Affordable Medical shall have each executed and delivered to the Lender two original copies of a Guaranty Agreement, dated as of the Effective Date, in the form attached hereto as Exhibit E;

(g)      Subordination Agreement. Madhu Mathew Mammen, Imad Siddiqui, and the Credit Parties shall have each executed and delivered to the Lender a copy of a Subordination Agreement, dated as of the Effective Date, in the form attached hereto as Exhibit F;

(h)     Closing Statement. The Borrower shall have executed and delivered to the Lender a closing statement in form and substance satisfactory to the Lender;

(i)       Corporate Documents. The Lender shall have received such evidence as it may require as to the authority of the officers or attorneys-in-fact executing this Amendment and such other corporate documents it may request, including, but not limited to, approval of the board of directors of each of the Credit Parties, resolutions of the shareholders of the Subsidiaries of the Borrower, an officer's certificate of each Credit Party, each in form and substance satisfactory to the Lender in its sole discretion;

(j)        Opinion of Counsel. The Lender shall have received a customary opinion of the Credit Parties', in form and substance satisfactory to the Lender in its sole discretion;

(k)       Search Results. The Lender shall have received copies of UCC search reports, issued by the Secretary of State of the state of incorporation of each Credit Party, dated such a date as is reasonably acceptable to Lender, listing all effective financing statements which name the Credit Parties, under their present name and any previous names, as debtors, together with copies of such financing statements;

 

(1)       Certificate of Good Standing. The Lender shall have received copies of certificates of good standing with respect to each Credit Party, issued by the Secretary of State of the state of incorporation of each Credit Party, dated such a date as is reasonably acceptable to Lender, evidencing the good standing thereof;

(m)    Fees Paid. The Lender or its counsel shall have received payment in full of all fees and expenses due under this Amendment; and

(n)      No Event of Default; Representations and Warranties. The Lender shall be satisfied, and shall have received a certificate signed by a duly authorized officer of each Credit Party, dated such a date as is reasonably acceptable to Lender, that (i) no Event of Default or event which, with the passage of time, giving of notice or both would become an Event of Default have occurred and be continuing; and (ii) the representations and warranties of the Borrower contained in the Credit Agreement, as amended and supplemented hereby, shall be true on and as of the Effective Date (except to the extent such representation or warranty expressly relates to an earlier date).

15.            Execution in Counterparts. This Amendment may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Amendment, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or ".pdf” signature page was an original thereof

16.            Authority and Approval of Agreement; Binding Effect. The execution and delivery by the Credit Parties of this Amendment, and the documents executed and delivered in connection herewith, and the performance by Credit Parties of all of its obligations hereunder and thereunder, have been duly and validly authorized and approved by the Credit Parties and its boards of directors pursuant to all applicable laws, and other than the corporate action or resolutions delivered by the Credit Parties in connection with this Amendment, no other corporate action or consent on the part of the Credit Parties. its board of directors, stockholders or any other Person is necessary or required by the Credit Parties to execute this Amendment, and the documents executed and delivered in connection herewith and therewith, to consummate the transactions contemplated herein and therein, or perform all of the Credit Parties' obligations hereunder and thereunder. This Amendment, and each of the documents executed and delivered in connection herewith and therewith, have been duly and validly executed by the Credit Parties (and the officer executing this Amendment and all such other documents is duly authorized to act and execute same on behalf of the Credit Parties) and constitute the valid and legally binding agreements of the Credit Parties, enforceable against the Credit Parties in accordance with their respective WI ins.

17.            Indemnification. Except for claims resulting from the Lender's gross negligence or willful misconduct, the Credit Parties hereby indemnify and hold the Lender harmless from and against any and all claims payable by the Lender to any Person, including reasonable attorneys and paralegals' fees and expenses, court costs, settlement amounts, costs of investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable law, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to any matters relating to this Amendment, or any of the Loan Documents. The foregoing indemnification obligations shall. survive the termination of any of the Loan Documents and repayment of the Revolving Note.

 

18.            Release. As a material inducement for Lender to enter into this Amendment, the Credit Parties do hereby release, waive, discharge, covenants not to sue, acquits, satisfies and forever discharges the Lender and its respective successors and assigns, from any and all claims whatsoever in law or in equity which the Credit Parties ever had, now has, or which any successor or assign of the Credit Parties hereafter can, shall or may have against the Lender, for, upon or by reason of any matter, cause or thing whatsoever related to the this Amendment or any other Loan Documents, through the date hereof. The Credit Parties further expressly agree that the foregoing release and waiver is intended to be as broad and inclusive as permitted by the laws of the jurisdiction governing the Loan Documents. In addition to, and without limiting the generality of foregoing, the Credit Parties further covenant with and warrant unto the Lender, that there exist no claims, counterclaims, defenses, objections, offsets or other claims against the Lender, or the obligation of the Credit Parties to comply with the terms and provisions of the Loan Documents. The foregoing release shall survive the termination of any of the Loan Documents and repayment of the Revolving Note.

19.            Lender's Conduct. As of the date of this Amendment, the Credit Parties hereby acknowledge and admit that: (i) the Lender has acted in good faith and has fulfilled and fully performed all of its obligations under or in connection with any of the Loan .Documents; and (ii) that there are no other promises, obligations. understandings or agreements with respect to the Loan Documents, except as expressly set forth herein and the other Loan Documents.

20.            GOVERNING LAW. EXCEPT IN THE CASE OF THE MANDATORY FORUM SELECTION CLAUSE SET FORTH HEREIN, THIS AMENDMENT, THE CREDIT AGREEMENT, AS AMENDED HEREBY, THE LOAN DOCUMENTS AND THE REVOLVING NOTE SHALL BE SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

21.            MANDATORY FORUM SELECTION. ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH THE AMENDMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THE AMENDMENT (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA. THIS PROVISION IS INTENDED TO BE A "MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH. FLORIDA LAW.

22.            Amendment Effective Date. All references in any Loan Document to the Credit Agreement on and after the date hereof shall be deemed to refer to the Credit Agreement as amended hereby, and the parties hereto agree that on and after the Effective Date, the Credit Agreement, as amended hereby, is in full force and effect.

 

[signatures pages follow]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF. the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written,

BORROWER:

ONCOLOGIX TECH, INC.

 

 

By: /s/ Roy Vayne

Name: Roy Vayne E in

Title: Chief Executive Officer

 

 

 

 

LENDER:

 

TCA GLOBAL CREDIT MASTER FUND, LP

By: TCA Global Credit Fund GP, Ltd.

Its: General Partner

 

By: /s/ Robert Press

Name: Robert Press

Title: Director

 

 

 

 

 

 

 

 

 

Exhibit 10.2

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

by and among


ONCOLOGIX TECH, INC.

 

MADHU MATHEW MAMMEN

 

IMAD SIDDIQUI

 

and

ESTEEMCARE, INC.

 

SEPTEMBER 25, 2014

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of September 25, 2014, is made and entered into by and among Oncologix Tech, Inc., a Nevada corporation (the “Purchaser”), Esteemcare, Inc., a South Carolina corporation (the “Company”), and Madhu Mathew Mammen, a resident of the State of South Carolina, and Imad Siddiqui, a resident of the State of Georgia, being the sole stockholders of the Company (each a “Seller” and collectively, “Sellers”).

WHEREAS, the Company is engaged in the manufacture, sale and distribution of home medical, durable medical and C-PAP equipment and supplies (the “Business”);

WHEREAS, the Sellers own, beneficially and of record, all of the issued and outstanding shares of capital stock of the Company (the “Shares”) comprised of seventy-five (75) shares of common stock owned beneficially and of record by Madhu Mathew Mammen and twenty-five (25) shares owned beneficially and of record by Imad Siddiqui; and

WHEREAS, the Purchaser wishes to purchase, and the Sellers wish to sell, all of the Shares on the terms and conditions set forth in this Agreement.

In consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

                                                                                                                                                            ARTICLE I

SALE AND PURCHASE OF SHARES

1.1              Sale and Purchase of Shares. Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties herein set forth, at the Closing, the Sellers shall sell, transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall purchase from the Sellers, all of Sellers’ right, title and interest in and to the Shares.

1.2              Purchase Price. The purchase price for the Shares (the “Purchase Price”) shall be equal to Five Hundred Thousand Dollars ($500,000), paid as follows:

(a)                Four Hundred Thousand Dollars ($400,000) (the “Cash Payment”) shall be paid in cash at the Closing to the Sellers with Three Hundred Thousand Dollars ($300,000) to be paid to Madhu Mathew Mammen and One Hundred Thousand Dollars ($100,000) to be paid to Imad Siddiqui; and

(b)               The delivery of a promissory note to each of the Sellers, in the aggregate principal amount of One Hundred Thousand Dollars ($100,000), in substantially the form of Exhibit A attached hereto (the “Note”) as follows:

Madhu Mathew Mammen: $75,000.00

Imad Siddiqui: $25,000.00

1.3              Time and Place. The closing of the purchase and sale of the Shares provided for in this Agreement (the “Closing”) shall take place at the offices of the Company, 3223 Sunset Boulevard, Suite 104, West Columbia, South Carolina 29169 at 9:00 a.m. local time, immediately following the execution of this Agreement and following the satisfaction or waiver (to the extent permitted by applicable

law) by the appropriate party of the conditions set forth in ARTICLE VII or at such other time, date and place as the Purchaser and the Sellers may mutually agree (such date, the “Closing Date”).

1.4              Transactions at the Closing. At the Closing, the following shall occur:

(a)                The Purchaser shall make the following deliveries:

                                                                                             (i)                     payment of an amount equal to the Cash Payment by wire transfer of immediately available funds;

                                                                                            (ii)                    a Pledge Agreement in substantially the form of Exhibit B attached hereto for each Seller (the “Pledge Agreements”) as collateral security for the Notes;

                                                                                           (iii)                   duly executed Notes;

                                                                                           (iv)                   certificate of an officer of the Purchaser as to the incumbency of the officer authorized to execute this Agreement and each other document to which it is a party; and

                                                                                            (v)                    a certificate of an officer of the Purchaser certifying that the conditions to the Sellers’ obligations hereunder set forth in Section 7.3 have been satisfied.

(b)               The Company and the Sellers shall make the following deliveries to the Purchaser:

(i)                 stock certificates evidencing the Shares, accompanied by a stock power or other instruments of transfer duly executed;

(ii)               duly executed Non-Compete and Non-Solicitation Agreements for each Seller, in substantially the form of Exhibit C attached hereto;

(iii)             a copy of the Organizational Documents of the Company and each of its Subsidiaries, each as amended through the Closing Date, certified by an authorized officer of the Company;

(iv)             a certificate of an authorized officer of the Company as to the incumbency of its officers authorized to execute this Agreement and each other document to be executed at the Closing on behalf of the Company;

(v)               a certificate dated not later than ten (10) Business Days prior to the Closing Date from the Secretary of State of the state of incorporation of the Company and each of its Subsidiaries, and each state where each entity is duly registered as a foreign corporation as to the good standing of the Company and each of its Subsidiaries;

(vi)             the consents required to be obtained from third parties to allow the completion of the transactions contemplated hereby set forth on Schedule 1.4(b)(vi), which shall include all of the consents set forth on Schedule 3.4 (the “Required Consents”);

(vii)           resignation letters from each of the directors and officers of the Company and each of its Subsidiaries, effective immediately as of the Closing;

(viii)         a certificate of an authorized officer of the Company certifying in such capacity that the conditions to the Purchaser’s obligations hereunder set forth in Sections 7.2(a), 7.2(b),

7.2(c) and 7.2(d) (as each such condition pertains to the Company or the representations, warranties or covenants of the Company) have been satisfied; and

(ix)             a payoff letter, as of the Closing Date, for any outstanding Indebtedness of the Company and each of its Subsidiaries is form and substance reasonably acceptable to Purchaser.

                                                                                                                                                          ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller represents and warrants to the Purchaser as of the date of this Agreement, severally as to himself and the Shares recited in this Agreement as held by him only, as follows:

2.1              Title. Each Seller is the record and beneficial owner of the Shares recited as held by him in the recitals to this Agreement, free and clear of all Encumbrances. Each Seller has the full right, power and authority to enter into this Agreement and has the full right, power and authority to transfer, convey and sell to the Purchaser at the Closing the Shares recited as held by him. Neither Seller is a party to, subject to or bound by any agreement, any Order, or any Law which would prevent the execution or delivery of this Agreement or any other document to which he is a party or the consummation of the Contemplated Transactions and no authorization or approval or other action by, and no notice to or filing with, any Authority will be required to be obtained or made by either Seller in connection with the execution and delivery by him of this Agreement or any other documents to which he is a party or the consummation of the Contemplated Transactions.

2.2              Due Authorization; Enforceability. Each Seller has the full and absolute legal right, capacity, power and authority to execute and deliver this Agreement and any other documents to which he is a party, to perform his obligations hereunder and thereunder and to consummate the Contemplated Transactions. This Agreement and any other documents to which the Seller is a party has been validly executed and delivered by the Seller, and each constitutes a valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity.

2.3              No Violation. The execution and delivery by each Seller of this Agreement, the consummation of the Contemplated Transactions, and the performance of each Seller’s obligations hereunder does not and will not: (a) violate, conflict with or constitute a default under any contract to which that Seller is party or by which that Seller is bound or to which that Seller’s property is subject, (b) violate any applicable Law or Order of any Authority having jurisdiction over that Seller or any of that Seller’s property, subject to the Purchaser’s representations of investment purpose and restrictions on further transfer imposed by applicable securities laws and regulations, (c) require any authorization, consent or approval of, filing with, exemption or other action by, or notice to, any Authority or any party to any contract to which that Seller is party or by which that Seller is bound or to which that Seller’s property is subject; or (d) result in the creation or imposition of any Encumbrance upon the Shares.

                                                                                                                                                        ARTICLE III

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

Except as set forth in the disclosure schedules dated as of the date hereof and delivered herewith to the Purchaser, which identifies the section and subsection to which each disclosure therein relates (the

“Disclosure Schedules”), each Seller and the Company, jointly and severally, hereby represent and warrant to the Purchaser as of the date of this Agreement as follows:

3.1              Organization; Authority; Due Authorization. The Company and each of its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of its state of incorporation, and has all necessary corporate power and authority to own, lease and operate the assets owned by it and the Business and to carry on the Business as now conducted. The Company and each of its Subsidiaries is duly qualified to transact business as a foreign corporation and is in good standing in each of the jurisdictions listed on Schedule 3.1, which jurisdictions are the only jurisdictions in which the ownership, leasing or operation of the assets owned by it or the conduct of the Business requires such qualification, except to the extent that the failure to be qualified in a particular jurisdiction would not have a material adverse effect on the Company. The Company has all requisite corporate power and authority to enter into, execute and deliver this Agreement and any other documents to which the Company is a party, to consummate the Contemplated Transactions, and to perform fully its respective obligations hereunder and thereunder. The Company has taken all actions necessary to authorize it to execute, deliver and perform fully its obligations under this Agreement and to consummate the Contemplated Transactions, and no other action or proceeding is necessary for the Company to execute, deliver and perform its obligations under this Agreement and to consummate the Contemplated Transactions. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity. Schedule 3.1 sets forth a true and complete list of the names of the directors and the officers of the Company and the directors and officers of each of its Subsidiaries.

3.2              Capitalization of the Company and Subsidiaries.

(a)                The Company has one hundred (100) shares of common stock, no par value, which is the only outstanding class of the Company’s capital stock, issued and outstanding and owned of record and beneficially by the Sellers as set forth on Schedule 3.2. No other class or series of equity of the Company is authorized, reserved or outstanding. The Sellers are the sole stockholders of the Company. The Shares have been duly authorized and validly issued. Except as set forth on Schedule 3.2(a): (i) there are no outstanding subscriptions, warrants, calls, options, rights (including unsatisfied preemptive rights, stock appreciation rights or conversion or exchange rights or other arrangements), commitments or agreements to which the Company is bound that permit or entitle any Person to purchase or otherwise to receive from or to be issued any Shares or any security or obligation of any kind convertible into or exchangeable for any Shares, (ii) no Person has any right to cause the purchase, redemption or repurchase of any Shares or other securities of the Company legally or beneficially owned by it, (iii) no Shares are subject to any agreements or understandings among any Persons with respect to the voting or transfer of the Shares (other than the Organizational Documents of the Company), (iv) the Company has not granted any registration rights to any Person with respect to its outstanding Shares or other securities and (v) the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) on any matter.

(b)               Except for Affordable Medical Equipment Solutions, Inc., a Florida corporation (“AME”), the Company has no Subsidiaries. AME is wholly owned, directly or indirectly, by the Company and there are no outstanding subscriptions, options, warranties, commitments, preemptive rights of any kind relating to the issuance or sale of any shares of capital stock of AME. Yarita Sanchez has no ownership interest of any kind in AME or any of its assets.

3.3              No Violation. The execution and delivery by the Company of this Agreement and the other documents to which it is a party, the consummation the Contemplated Transactions, and the performance of the Company hereunder and thereunder will not: (a) violate any provision of any of the Organizational Documents of the Company, (b) except as set forth on Schedule 3.3, violate, conflict or constitute a default under, permit the termination or acceleration of, or cause the loss of any rights or options under, any Contract or License to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries may be bound or to which its property may be subject; (c) except as set forth on Schedule 3.3 or Schedule 3.4, require any authorization, consent or approval of, filing with, exemption or other action by, or notice to, any Authority or any party to any Contract or License to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which the Company’s or any of its Subsidiaries’ property is subject; or (d) result in the creation or imposition of any Encumbrance upon the Shares or upon any Asset of the Company or any of its Subsidiaries (other than, in the case of the Assets only, a Permitted Lien). Neither, the Company nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any provision of its Organizational Documents.

3.4              Regulatory Approvals and Other Consents. Schedule 3.4 sets forth a complete list of (a) each consent, approval, authorization, notice, filing, exemption, waiver or other requirement required by the Organizational Documents of the Company or any Law which must be obtained or is required to be made, obtained or otherwise satisfied by the Company in order for the Company to execute and deliver this Agreement or Other Company Documents as applicable, to perform its obligations hereunder and thereunder and to consummate the Contemplated Transactions; and (b) each consent, approval, authorization, notice, filing, exemption or waiver required by the terms of any Contract in connection with the consummation of the Contemplated Transactions.

3.5              Sufficiency of and Title to Assets. Schedule 3.5 sets forth a list, including the location of each item, of Tangible Personal Property owned by the Company and each of its Subsidiaries having either a depreciated book value or estimated fair market value in excess of $10,000, or used in the Business and having rental, license or other payments therefor in excess of $20,000 per year. Without limiting the representations and warranties as to specific classes of assets: (a) the Assets are sufficient for the conduct of the Business immediately after the Closing in the same manner as conducted immediately prior to the Closing; (b) the Company and each of its Subsidiaries has good title to the Assets owned or purported to be owned by it (including all of the Assets reflected in the balance sheets included in the Financial Statements) and has the valid and enforceable right (subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity) to use all of the Assets not owned by it, in each case free and clear of all Encumbrances other than Permitted Liens and Encumbrances described on Schedule 3.5. Neither the Company nor any of its Subsidiaries has received any written notice from any Authority with respect to any taking of any of the Assets or any portion thereof or interest therein by eminent domain or otherwise, and there is no proceeding pending or threatened with respect thereto. The Company and AME have the right, title and interest to use the name “Affordable Medical Equipment Solutions” or any variation thereof in the conduct and operation of the Business in the State of Florida only.

3.6              Financial Condition; Financial Statements; Books and Records; Financial Due Diligence.

(a)                Schedule 3.6 contains a true and correct copy of the unaudited consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2013 and the related statements of income and cash flow for the fiscal year ended December 31, 2013 and the unaudited consolidated balance sheet of the Company and its Subsidiaries as of September 15, 2014 (the “Balance Sheet”) and the related statement of income and cash flow for the nine and one-half (9 1/2) months ended September 15, 2014

(collectively, the “Financial Statements”). The Financial Statements: (i) fairly present the financial position of the Company and its Subsidiaries as of the date, and the results of its operations for the periods indicated therein; and (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (subject, in the case of unaudited statements, to the absence of footnote disclosure and in the case of unaudited interim statements to normal year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse)).

(b)               Neither the Company nor any of its Subsidiaries has material liabilities, claims or obligations of any nature, whether accrued, absolute, contingent, anticipated or otherwise, whether due or to become due, that are required to be disclosed in a balance sheet prepared in accordance with GAAP, except for those (i) reflected or reserved against in the Balance Sheet, and (ii) incurred after the date of the Balance Sheet in the ordinary course of business, including, without limitation, those incurred in connection with the transactions contemplated by this Agreement. For the purposes of this Section 3.6 “material” shall mean that the reasonable effect of any such inaccuracy (i) could have caused the Purchaser to draw a different conclusion to the relevant matters concerned and (ii) could, had the Purchaser known, have impacted on the key commercial terms of the acquisition of the Shares. The books of account, minute books, stock ledgers and other financial books and records of the Company and each of its Subsidiaries are kept in the ordinary course of business in accordance with reasonable business practices and applicable Laws. The Company and each of its Subsidiaries records transactions as necessary to permit preparation of the consolidated financial statements of the Company and accounts, notes and other receivables are recorded accurately.

(c)                There has been no material adverse change in the business, operations or condition (financial or otherwise) of either the Company or any of its Subsidiaries since December 31, 2013.

3.7              Tax Matters.

All Tax Returns required to have been filed by the Company and each of its Subsidiaries on or prior to the Closing Date have been duly and timely filed, and each such Tax Return is true, accurate and correct. All Taxes required to be paid by the Company and each of its Subsidiaries (whether or not shown on any Tax Return) on or prior to the Closing Date have been timely paid. As of the Closing Date, the liability of the Company and/or any of its Subsidiaries for any unpaid Taxes will not exceed the reserve for unpaid Taxes then carried on the Company’s books and records.

(a)                There is no action, audit, dispute or claim in respect of any Taxes now proposed or pending which has been communicated to the Company or any of its Subsidiaries, or, to the Knowledge of the Company, threatened against, the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is the beneficiary of any extension of time within which to file any Tax Return, nor has it made (or had made on its behalf) any requests for such extensions. No claim has ever been made by a taxing Authority in a jurisdiction where either the Company does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction or that the Company or any of its Subsidiaries must file Tax Returns in that jurisdiction, and the Company is not aware of any reasonable grounds upon which any such taxing Authority might successfully assert that the Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction or that the Company or any of its Subsidiaries must file Tax Returns in that jurisdiction. There are no Encumbrances, other than Permitted Liens, on any of the assets of the Company or any of its Subsidiaries with respect to Taxes.

(b)               The Company and each of its Subsidiaries has (i) withheld all required amounts from its employees, agents, contractors, nonresident creditors, or other third parties that were required to be withheld on or prior to the Closing Date and has remitted such amounts to the proper Authority unless otherwise not yet due; (ii) paid all employee contributions and premiums required to be paid on or prior to

the Closing Date; and (iii) filed all Tax returns with respect to employee income Tax withholding, and social security and unemployment Taxes and premiums that were required to be filed on or prior to the Closing Date, all in compliance with the withholding Tax provisions of the Code, as in effect for the applicable year or any prior provisions thereof and other applicable Laws, including state, local or foreign law.

(c)                Schedule 3.7: (i) lists all federal, state, local, and foreign Tax Returns filed by the Company and each of its Subsidiaries for all taxable periods over past five (5) years and (ii) indicates those Tax Returns described in clause (i) that have been audited. The Company has delivered or made available to the Purchaser correct and complete copies of all Tax Returns filed, examination reports, and statements of deficiencies assessed against or agreed to by to the Company and each of its Subsidiaries for all taxable periods for the past five (5) years. Neither the Company nor any of its Subsidiaries has waived (and is not subject to a waiver of) any statute of limitations in respect of Taxes and has not agreed to (and is not subject to) any extension of time with respect to a Tax assessment or deficiency.

(d)               Except as set forth on Schedule 3.7, there is no contract, agreement, plan or arrangement covering any employee or former employee of the Company or any of its Subsidiaries that, individually or collectively, could give rise to the payment by the Company or any of its Subsidiaries on or prior to the Closing Date of any amount that would not be deductible by reason of Section 280G of the Code or any corresponding provisions of state, local or foreign Tax Law. There is no contract,agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound to compensate any individual for excise Taxes paid pursuant to Section 4999 or 409A of the Code.

(e)                Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date, (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (iii) installment sale or open transaction disposition made on or prior to the Closing Date, (iv) prepaid amount received on or prior to Closing Date; (v) election pursuant to Code Section 108(i) made effective on or prior to the Closing Date; or (vi) excess loss account. Neither the Company nor any of its Subsidiaries has distributed stock of another entity, nor has the Company had its stock distributed by another entity, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361. Neither the Company nor any of its Subsidiaries has engaged in any transaction that could affect the income Tax liability for any taxable year not closed by the applicable statute of limitations which is (i) a “tax shelter”, (ii) “reportable transaction”, (iii) a “listed transaction” or has (iv) a “significant purpose of which is the avoidance or evasion of United States federal income tax” within the meanings of Sections 6662, 6662A, or 6707A of the Code or Treasury Regulations promulgated thereunder or pursuant to notices or other guidance published by the IRS (irrespective of the effective dates).

3.8              Litigation. There is no complaint, action, suit, proceeding, arbitration or other alternate dispute resolution procedure, demand, investigation or inquiry, whether civil, criminal or administrative (“Litigation”) pending or, to the Company’s Knowledge, threatened against the Company, any of its Subsidiaries, the directors or officers of the Company (in such capacity) or its Business or Assets. Neither the Company, any of its Subsidiaries, nor any of its Assets is subject to any Order. There is no Litigation pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries which seeks to prevent consummation of the Contemplated Transactions or which seeks damages in connection with the Contemplated Transactions, and no temporary restraining order, preliminary or

permanent injunction or other Order or decree which prevents the consummation of the Contemplated Transactions has been issued and remains in effect.

3.9              Intellectual Property. Schedule 3.9 sets forth a correct and complete list of all Intellectual Property Assets that are (i) registered or otherwise filed by or with any Authority, (ii) any trade secrets, processes, techniques, methods, formulae, ideas and know-how, material to the Company, and (iii) Intellectual Property Licenses. Except as indicated on Schedule 3.9:

(a)                Either the Company or one of its Subsidiaries is the sole owner of all right, title and interest in and to each Intellectual Property Asset owned or purported to be owned by it and has the valid and enforceable right (subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity) to use all of the Intellectual Property Assets not owned by it, free and clear of all Encumbrances (other than Permitted Liens) and with absolute right of use without seeking the approval or consent of any Person and without payment (except in each case for Intellectual Property Assets licensed to the Company under an Intellectual Property License or other contract, agreement or other arrangement relating to such Intellectual Property Asset);

(b)               the Intellectual Property Assets are all intellectual property necessary for the operation of the Business as currently conducted;

(c)                all registrations and applications for the Intellectual Property Assets required to be disclosed on Schedule 3.9 are in full force and effect;

(d)               none of the Intellectual Property Assets required to be disclosed on Schedule 3.9 is subject to any outstanding Order limiting the scope or use thereof or declaring any of the Intellectual Property Assets abandoned;

(e)                (i) to the Knowledge of the Company, its current use of the Intellectual Property Assets does not unlawfully infringe or dilute the intellectual property rights of any third person, and (ii) no investigations are pending concerning the possibility of such infringing or diluting use;

(f)                except as set forth on Schedule 3.9, neither the Company nor any of its Subsidiaries has granted any license, franchise, permit or other right to any Person to use any of the Intellectual Property Assets;

(g)                to the Knowledge of the Company, the conduct of the Business has not and does not infringe upon or misappropriate any intellectual property of any Person, and there are no pending or, to the Knowledge of the Company, threatened in writing claims alleging that the Company, any of its Subsidiaries or the operation of the Business infringes or misappropriates the intellectual property rights of any Person;

(h)               there are no pending claims, actions, judicial or other adversary proceedings nor to the Knowledge of the Company, are there any disputes or disagreements involving any Intellectual Property Asset, and, to the Knowledge of the Company, no such action, proceeding, dispute or disagreement is threatened; and

(i)                 neither the Sellers nor any employees of the Company or any of its Subsidiaries own, or can legitimately claim to own, in a personal capacity any intellectual property rights that are necessary for the Company or any of its Subsidiaries to continue operating the Business in the same manner as at the Closing Date.

3.10          Contracts.

(a)                Schedule 3.10 sets forth a correct and complete list of the following written and verbal contracts or agreements by which the Company and each of its Subsidiaries currently is bound, including any amendments, supplements or modifications thereto (the “Contracts”), listed by subsection set forth below:

(i)             each contract, unpaid invoice, unfilled sales order and other arrangement or agreement that involves performance of services by the Company and each of its Subsidiaries of an amount or value in excess of $25,000;

(ii)           each contract, unpaid invoice, unfilled sales order and other arrangement or agreement that involves performance of services or delivery of goods or materials to the Company and each of its Subsidiaries of an amount or value in excess of $25,000;

(iii)         each contract, unpaid invoice, unfilled sales order and other arrangement or agreement that involves expenditures or receipts of or by the Company and each of its Subsidiaries in excess of $25,000;

(iv)         each contract, unpaid invoice, unfilled sales order and other arrangement or agreement that cannot be cancelled by the Company and each of its Subsidiaries without penalty or further payment and without more than thirty (30) days’ notice;

(v)           each loan agreement, promissory note, bond, letter of credit or other instrument or agreement with respect to the borrowing of money;

(vi)         each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other agreement affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property;

(vii)           each Intellectual Property License;

(viii)         each agreement containing an indemnification obligation of the Company;

(ix)             each agreement in which the Company’s and each of its Subsidiaries’ liability is not limited (other than an exclusion from the limitation of liability for gross negligence or willful or intentional misconduct);

(x)           each collective bargaining agreement and contract with any labor union or other employee representative of a group of employees;

(xi)         each joint venture, partnership, limited liability company and other agreement (however named) involving a sharing of profits, losses, costs or liabilities by the Company or any of its Subsidiaries with any other Person (excluding bonus arrangements and employment plans for officers or employees of the Company);

(xii)       each agreement or contract containing covenants that in any way purport to limit the freedom of the Company or any of its Subsidiaries, or any officer, director, manager, employee, consultant or contractor thereof, to engage in any line of business, compete with any Person, or operate in any territory;

(xiii)     each agreement or contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods;

(xiv)     each agreement or contract for individual capital expenditures in excess of $5,000 or aggregate capital expenditures in excess of $25,000; and

(xv)           each employment, consulting, management, separation, severance or similar agreement with employees of, or consultants or independent contractors to, the Company or any of its Subsidiaries, in each case involving payments by the Company in excess of $25,000.

(b)               Except as disclosed in the list set forth on Schedule 3.10:

(i)             each Contract is the valid and binding obligation of the Company or any of its Subsidiaries and, to the Knowledge of the Company, each other Person or party thereto, enforceable in accordance with its terms, and is in full force and effect subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity;

(ii)           there exists no material breach of or default by the Company or any of its Subsidiaries under any Contract and assuming that the Required Consents and all consents listed on Schedule 3.4 are obtained prior to the Closing, there has not occurred any event or events that, with the lapse of time or the giving of notice or both, would constitute a material breach or default by the Company under any Contract;

(iii)         to the Knowledge of the Company: (A) no other Person party to any Contract is now in breach of or default under any term thereof or has breached or defaulted under any term thereof (which breach or default remains uncured as of the date hereof) and (B) there has not occurred any event or events that, with the lapse of time or the giving of notice or both, would constitute a breach or default by any other party under any Contract; neither the Company nor any of its Subsidiaries has received any notice of any anticipated breach of or default under any term thereof by any Person party to any Contract;

(iv)         neither the Company nor any of its Subsidiaries has received any written notice that any Person party to any Contract currently intends to cancel, terminate or renegotiate prior to its expiration such Contract or to exercise or not to exercise any option to acquire assets thereunder; and

(v)               copies of each of the written Contracts, together with all amendments, modifications or other changes thereto have been made available to the Purchaser.

3.11          Compliance With Laws.

(a)                The Company and each of its Subsidiaries is in and has been in material compliance with all applicable Laws in connection with the operation of the Business or ownership or use of the Assets and no investigation, inquiry, audit or review by any Authority with respect to the Company, any of its Subsidiaries or the Business is pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries alleging any failure to so comply, nor has any Authority notified the Company or any of its Subsidiaries of an intention to conduct the same. All reports, filings and returns required to be filed by or on behalf of the Company or any of its Subsidiaries with any Authority on or prior to the Closing Date have been filed.

(b)               The Company and each of its Subsidiaries possesses all Licenses required to be obtained for the operation of the Business as presently conducted, all such Licenses are in full force and effect and no suspension or cancellation is, to the Knowledge of the Company, threatened in writing. Schedule 3.11(b) contains a complete and accurate list of each License that is held by the Company or that otherwise relates to the Business and is required for the operation of the Business substantially as presently conducted. Each License listed or required to be listed on Schedule 3.11(b) is valid and in full force and effect. Except as set forth on Schedule 3.11(b): (i) the Company and each of its Subsidiaries is, and at all times has been, in compliance with all of the terms and requirements of each License identified or required to be identified on Schedule 3.11(b), (ii) no event has occurred or circumstances exists that may (with or without notice or lapse of time) (A) constitute or result in a violation of or a failure to comply with any term or requirement of any License listed or required to be listed on Schedule 3.11(b) or (B) result in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any License listed or required to be listed on Schedule 3.11(b), (iii)  the Company and each of its Subsidiaries has not received any written notice from any Authority or any other Person regarding (A) any actual or alleged violation of or failure to comply with any term or requirement of any License or (B) any actual or proposed revocation, withdrawal, suspension, cancellation, termination of or modification or any License, in each case relating to the Business, and (iv) all applications required to have been filed for the renewal of the Licenses listed or required to be listed on Schedule 3.11(b) have been duly filed on a timely basis with the appropriate Authority, and all other filings required to have been made with respect to such Licenses have been duly made on a timely basis with the appropriate Authority. The Licenses listed on Schedule 3.11(b) collectively constitute all of the Licenses necessary to permit the Company and each of its Subsidiaries to lawfully conduct and operate the Business in the manner in which its currently conduct and operate the Business and to permit the Company to own or lease and use its Assets in the manner in which it currently owns or leases and uses such Assets.

3.12          Insurance Coverage. Schedule 3.12 contains a complete and accurate list of all of the insurance policies maintained by the Company that cover the assets, business, equipment, properties, operations, employees, officers and directors of the Company. Except as set forth on Schedule 3.12, there are no pending claims under any of such policies. All premiums due and payable under all such policies and bonds have been paid and the Company is otherwise in material compliance with the terms and conditions of all such policies. Such policies of insurance are in full force and effect and are of such types and in such amounts and for risks, casualties and contingencies as may be required under applicable Laws.

3.13          Real Property.

(a)                Neither the Company nor any of its Subsidiaries owns any real property.

(b)               All real property leases and subleases to which the Company or any of its Subsidiaries is a party and any amendments or modifications thereof are listed on Schedule 3.13 (each a “Lease” and collectively, the “Leases”). Schedule 3.13 indicates each property of which the Company is the tenant or subtenant. True and complete copies of each Lease have been made available to the Purchaser, and the Leases constitute the entire understanding relating to the Company’s or any of its Subsidiaries’ use and occupancy of the leased premises. Except as listed on Schedule 3.13, the Leases are valid, in full force and effect and enforceable subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity. Except as listed on Schedule 3.13 (i) there are no existing defaults on the part of the Company or any of its Subsidiaries or, to the Knowledge of the Company, any other Person, under the Leases, (ii) neither the Company nor any of its Subsidiaries has received or given written notice of any default or claimed default with respect to any Lease that remains uncured, and (iii)  no event has occurred or circumstances exist that (with or without notice or lapse of time) constitute or will result in a default on the part of the Company or any of its Subsidiaries thereunder. The Company and each of its Subsidiaries has performed all tenant or subtenant

obligations under each Lease concerning the construction of tenant improvements at each property subject to such Lease, and all fees, tenant improvement allowances and other landlord concessions under each Lease have been paid or performed in full. None of the Leases prohibits the use of property subject to such Lease for the purposes for which each is currently used. No commission or other payment is due any real estate broker by the Company in connection with any Lease, and there are no agreements, oral or written, under which any real estate broker is entitled to any future payment or commission by the Company and each of its Subsidiaries or its assignees, in connection with any Lease or property subject to any Lease. Other than as set forth on Schedule 3.13, no leased property is subject to any lease, sublease, license or other written agreement to which the Company or any of its Subsidiaries is a party granting to any other Person any right to the use, occupancy or enjoyment of such leased property or any part thereof. Neither the Company nor any of its Subsidiaries has granted to any Person any right, option, right of first offer or right of first refusal to lease, sublease, use or occupy all or part of any property subject to a Lease. The improvements constructed on property subject to a Lease are supplied with water, sewage disposal or septic, electricity, gas, telephone and other services necessary for the operation of such improvements as currently operated, and there is no condition which would reasonably be expected to result in the termination of the present access from any improvements to such utility services. All septic systems are in functioning condition and in good order and repair.

3.14          Environmental Matters. There has been no spill or release of any Hazardous Substance at any real properties currently owned, leased or operated by the Company or any of its Subsidiaries during the period of occupancy by the Company or its Subsidiaries in violation of any Environmental Law. There are no underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Substances are being or, to the Company's Knowledge, have been treated, stored or disposed of, on any real property currently or formerly owned, leased, used or occupied by the Company except in a manner that complies in all material respects with Environmental Laws as in effect on the date of this Agreement. To the Company’s Knowledge, there is no friable asbestos or asbestos containing material in a friable state on any of the real properties currently owned, leased or occupied by the Company. Neither the Company nor any of its Subsidiaries has received any notice of claim, demand or other notification or communication that the Company or any of its Subsidiaries is or may be responsible with respect to any Remedial Action relating to any threatened or actual release of any Hazardous Substance or alleging any violation or failure to comply with any Environmental Law or License. There are no claims pending or, to the Knowledge of the Company, threatened with respect to compliance with, or liability under, any Environmental Law or License. The Company has made available to the Purchaser copies of (i) all known reports and assessments and (ii) all correspondence to or from any Authority or third party complaints related to purported violations of Environmental Laws, in each case to the extent in the possession of the Company and relating to environmental matters at any real properties currently owned, leased or operated by the Company, or relating to the Company’s or any of its Subsidiaries’ compliance with or potential liability under Environmental Laws as in effect on the date of this Agreement.

3.15          Employee Matters.

(a)                Schedule 3.15(a) sets forth, with respect to each Employee (including any Employee who is on a leave of absence by reason of disability or otherwise or on layoff status subject to recall), (i) the name of such employee and the date as of which such employee was originally hired by the Company or any of its Subsidiaries, and whether the employee is on an active or inactive status; (ii) such employee’s title or position; (iii) such employee’s wage classification as exempt or non-exempt; and (iv) such employee’s annualized compensation as of the date of this Agreement, including base salary.

(b)               Schedule 3.15(b) lists (i) all Persons who are currently performing services for the Company or any of its Subsidiaries who are classified for Tax, labor or employment Law purposes as “consultants” or “independent contractors,” (ii) the current rate of compensation of each such Person, and

(iii) whether the Company is party to an agreement with such Person (whether or not in writing). Any such agreements are listed on Schedule 3.15(b) and have been made available (or, in the case of agreements that are not in writing, a summary thereof has been delivered) to the Purchaser.

(c)                Neither the Company nor any of its Subsidiaries is a party to or bound by any union contract, collective bargaining agreement or similar contract.

(d)               Except as disclosed on Schedule 3.15(d), (i) no current Employee has notified or otherwise indicated to the Company or any of its Subsidiaries that he or she intends to terminate his or her employment with the Company; (ii) the Company does not have the present intention to notify nor has it notified any Employee of its intent to terminate the employment of such Employee; (iii) all Employees have executed a form of noncompetition, nondisclosure and assignment of inventions agreement, which has been made available to the Purchaser; (iv) no Employee is a party to or is bound by any employment contract, patent disclosure agreement, noncompetition agreement or other restrictive covenant or other contract with any Person that would be likely to affect in any way (A) the performance by such Employee of any of his or her duties or responsibilities as an employee of the Company, or (B) the Business or operations of the Company; and (iv) to the Knowledge of the Company, no Employee of the Company or any of its Subsidiaries is in violation of any term of any employment contract, patent disclosure agreement, noncompetition agreement, or any other restrictive covenant to a former employer relating to the right of any such Employee to be employed by the Company or any of its subsidiaries. Except as disclosed on Schedule 3.15(d), (i) neither the Company nor any of its Subsidiaries has any severance pay practice or policy; and (ii) other than as mandated by Law, no Employee is entitled to any severance pay, bonus compensation, acceleration of payment or vesting of any equity interest, or other payment from the Company (other than accrued salary, vacation, or other paid time off in accordance with the policies of the Company) or the Purchaser as a result of or in connection with the Contemplated Transactions or as a result of any termination by the Company on the Closing of any Person employed by the Company on or prior to the Closing Date. The Company and each of its Subsidiaries is in and has been in material compliance with all currently applicable Laws respecting employment and employment and hiring practices, terms and conditions of employment, immigration, occupational health and safety, wages and hours. The Employees are properly classified under the Fair Labor Standards Act of 1938, as amended, and under any applicable state law, and have all times been properly classified under the Fair Labor Standards Act of 1938, as amended, and under any applicable state law. Except a set forth on Schedule 3.15(d), (i) there are no unfair labor practice complaints pending against the Company before the National Labor Relations Board or any other Authority or any current union representation questions involving Employees; (ii) the Company and each of its Subsidiaries is currently in compliance in all material respects with all applicable Laws relating to the employment of Employees, including those related to wages, hours, and collective bargaining; (iii) the Company and each of its Subsidiaries has paid in full to all of its Employees or adequately accrued for in accordance with GAAP all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such Employees; (iv) there is no claim with respect to payment of wages, salary or overtime pay that is now pending or, to the Knowledge of Company, threatened before any Authority with respect to any Persons currently employed by the Company or any of its Subsidiaries in connection with the Business; (v) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Authority relating to Employees or employment practices relating to the conduct of the Business; (vi) there is no charge or proceeding with respect to a violation of any occupational safety or health standard that has been asserted or is now pending or, to the Knowledge of the Company, threatened with respect to the Company or any of its Subsidiaries relating to the conduct of the Business; (vii) there is no charge of sexual harassment, or discrimination in employment or employment practices, for any reason, including age, gender, race, religion or other legally protected category, which has been asserted or is now pending or, to the Company’s Knowledge, threatened, before the United States Equal Employment Opportunity Commission, or any other Authority in any jurisdiction in which the Company has employed or currently employs any Person in connection with the Business; and (viii) during the past twelve (12) months, the

Company has not implemented or initiated any layoff or made or started any collective dismissal of employees requiring advance notice under the Workers Adjustment and Retraining Notification Act and any similar state or local Law (“WARN”).

3.16          ERISA/Employee Benefits. Schedule 3.16 lists each Employee Plan that covers any Employee, copies of which, and a summary plan description of each of which, have been made available or furnished to the Purchaser. Neither the Company nor any ERISA Affiliate has ever sponsored or maintained or has ever had any liability with respect to any plan subject to Title IV or ERISA, any funded welfare benefit plan, as defined in Section 419 of the Code, any multiple employer plan, or any arrangement subject to Section 409A of the Code. Neither the Company nor any ERISA Affiliate has any agreement or commitment to create any additional Employee Plan or Benefit Arrangement, enter into any additional employment agreement, or modify or change any existing Plan or employment agreement. With respect to each Employee Plan or Benefit Arrangement (each, a “Plan”), the Company has heretofore made available to the Purchaser true, correct and complete copies of (i) all documents which comprise the most current version of each such Plan, including any related trust agreements, insurance contracts or other funding or investment agreements and any amendments thereto, and (ii) with respect to each Plan that is an “employee benefit plan,” as defined in Section 3(3) of ERISA, (A) the three (3) most recent Annual Reports (Form 5500 Series) and accompanying schedules for each of the Plans for which such a report is required, (B) the three (3) most recent certified financial statements for each of the Plans for which such a statement is required or was prepared and (C) for each Plan intended to be “qualified” within the meaning of Section 401(a) of the Code, the most recent IRS determination, advisory or opinion letter issued to the Company, the Subsidiaries or, as applicable, the prototype plan sponsor, with respect to such Plan. To the Knowledge of the Company, the Company and each ERISA Affiliate has performed and complied with all of their obligations under and with respect to the Plans and each of the Plans has, at all times, in form, operation and administration complied with its terms, and, where applicable, the requirements of the Code, ERISA and all other applicable Laws. To the Knowledge of the Company, each Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code is so qualified and is the subject of a favorable IRS determination, advisory or opinion letter on which it may rely and, to the Knowledge of the Company, nothing has occurred which reasonably could be expected to adversely affect such qualified status. Except as set forth on Schedule 3.16, there are no unpaid contributions due prior to the date hereof with respect to any Plan that are required to have been made prior to the date hereto under the terms of the Plan or any applicable Laws. Neither the Company nor any ERISA Affiliate has any obligation to provide health benefits or other non-pension benefits to retired or other former employees, except as specifically required by Section 4980B of the Code or Part 6 of Title I of ERISA, and the Company and each ERISA Affiliate has complied with the requirements of Code Section 4980B and such Part 6, the requirements of the Health Insurance Portability and Accountability Act of 1996, and all similar state Laws. To the Knowledge of the Company, none of the Company, any ERISA Affiliate, or any director, officer or employee of the Company or any other “disqualified person” or “party in interest,” as defined in Section 4975 of the Code and Section 3(14) of ERISA, respectively, has engaged in any “prohibited transaction,” as defined in Section 4975 of the Code or Section 406 of ERISA, except when there has been a statutory or regulatory exemption, nor have there been any fiduciary violations under ERISA that could subject the Purchaser, the Company, or any ERISA Affiliate (or any officer, director or employee thereof) to any penalty or tax under Section 502(i) of ERISA or Sections 4971 and 4975 of the Code. With respect to any Plan: (i) no filing, application or other matter is pending with the IRS, the Pension Benefit Guaranty Corporation, the United States Department of Labor or any other Authority, (ii) there is no action, suit or claim pending (nor, to the Knowledge of the Company, any basis for such a claim), other than routine claims for benefits, and (iii) there are no outstanding liabilities for taxes, penalties or fees. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (i) entitle any current or former employee of the Company or any ERISA Affiliate to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting or increase the amount of any compensation due to any such employee or former employee or (iii) directly or indirectly result in any payment made or to be made to or on behalf of

any person constituting a “parachute payment” within the meaning of Section 280G of the Code, nor is the Company party to or bound by any contract that could require it to make any payment that could constitute a “parachute payment” within the meaning of Section 280G of the Code.

3.17          Absence of Certain Changes and Events. Except as set forth on Schedule 3.17 or as contemplated by this Agreement, since the date of the Balance Sheet, there has not been:

(a)                any transaction or expenditure involving more than $20,000 entered into by the Company or any of its Subsidiaries other than in the ordinary course of business;

(b)               any uninsured loss of or damage to any of the properties of the Company or any of its Subsidiaries due to fire or other casualty, amounting to more than $20,000 in the aggregate;

(c)                any declaration, setting aside or payment of any dividend or other distribution with respect to any Shares, or any repurchase, redemption, retirement or other acquisition by the Company of any outstanding Shares, or other securities of, or other equity or ownership interests in, the Company or any other capital contribution to or equity investment in the Company or any of its Subsidiaries;

(d)               the incurrence of any Encumbrance (other than a Permitted Encumbrance) or the incurrence of any obligation or liability other than current liabilities incurred since the date of the Balance Sheet in the ordinary course of business and consistent with past practice;

(e)                any change in the Organizational Documents of the Company or any of its Subsidiaries or any amendment of any term of any outstanding security of the Company;

(f)                any incurrence, assumption or guarantee by the Company or any of its Subsidiaries of any indebtedness for borrowed money other than in the ordinary course of business and in an aggregate amount not exceeding $20,000;

(g)                any making of any loan, advance or capital contributions to, or investment in, any Person other than ordinary course advances or deemed advances to and from operations;

(h)               any sale, lease, pledge, transfer or other disposition of any asset having a value in excess of $20,000 except for sales of inventory in the ordinary course of business or dispositions of obsolete machinery and equipment;

(i)                 any material transaction or commitment made, or any material contract or agreement entered into, by the Company or any of its Subsidiaries relating to the Business (including the acquisition or disposition of any assets except for sales of inventory in the ordinary course of business or dispositions of obsolete machinery and equipment) or any relinquishment by Company of any material contract or other right other than purchases or sales (or contracts or commitments therefor) made in the ordinary course of business;

(j)                 any (A) grant of any severance or termination pay to any director, manager, officer or employee of the Company or any of its Subsidiaries, (B) entering into of any employment, severance, management, consulting, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, manager, officer or employee of the Company or any of its Subsidiaries, (C) change in benefits payable under existing severance or termination pay policies or employment, severance, management, consulting or other similar agreements other than in the ordinary course of business, (D) change in compensation, bonus or other benefits payable to directors, managers, officers or employees of the Company or any of its Subsidiaries, other than in the ordinary course of

business with respect to employees other than officers, directors and managers of the Company or any of its Subsidiaries, or (E) change in the payment or accrual policy with respect to any of the foregoing;

(k)               any labor dispute or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its Subsidiaries, or any lockouts, strikes, slowdowns, work stoppages, grievances or threats thereof by or with respect to any employees of the Company;

(l)                 any sale, assignment or transfer of any Intellectual Property Asset owned or purported to be owned by the Company or any of its Subsidiaries;

(m)             any capital expenditures, or commitment to make any capital expenditures, for additions to property, plant or equipment in an aggregate amount exceeding $20,000;

(n)               any write-down or write-up (or failure to write down or write up in accordance with GAAP consistent with past practice) the value of any inventories or accounts receivables or revalued any Assets other than in the ordinary course of business consistent with past practice and in accordance with GAAP;

(o)               any change in any method of accounting or accounting practice or policy used by the Company, other than such changes required by GAAP;

(p)               any payment of any amounts to, or liability incurred to or in respect of, or sale of any properties or assets (real, personal or mixed, tangible or intangible) to, or any transaction or any agreement or arrangement with, any corporation or business in which the Company or any of its Subsidiaries or any of its officers, directors or managers, or any “affiliate” or “associate” (as such terms are defined in the rules and regulations promulgated under the Securities Act) of any such Person, has any direct or indirect ownership interests (excluding bonus arrangements and employment plans for officers or employees of the Company pursuant to any Contract); or

(q)               any failure to renew any insurance policy or License that is scheduled to terminate or expire within thirty (30) calendar days of the Closing.

3.18          Certain Transactions. Except as set forth on Schedule 3.18, and except for (a) relationships with the Company as an officer, director, or employee thereof (and compensation by the Company in consideration of such services) and (b) relationships with the Company as sellers, none of the directors, officers, or stockholders of the Company, or any stockholder of any of their families, is presently a party to, or was a party to during the three (3) years preceding the date of this Agreement, any transaction, or series of similar transactions, with the Company, in which the amount involved exceeds $20,000, including, without limitation, any contract, agreement, or other arrangement (i) providing for the furnishing of services to or by, (ii) providing for rental of real or personal property to or from, or (iii) otherwise requiring payments to or from, any such Person or any other Person in which any such Person has or had a 5%-or-more interest (as a stockholder, partner, beneficiary, or otherwise) or is or was a director, officer, employee, or trustee. None of the Company’s officers or directors has any interest in any property, real or personal, tangible or intangible, including inventions, copyrights, trademarks, or trade names, used in or pertaining to the Business, or any supplier, services provider, joint venturer or customer of the Company, except for the normal rights of a Seller, and except for rights under existing employee benefit plans.

3.19          Banking Facilities. Schedule 3.19 contains a complete and correct list of the names and locations of all banks in which the Company and each of its Subsidiaries has accounts or safe deposit boxes,

the designation of each such account and safe deposit box, and the names of all persons authorized to draw on or have access to each such account and safe deposit box.

3.20          No Broker. Except as set forth on Schedule 3.20, no broker, finder, agent or similar intermediary has acted for or on behalf of the Company in connection with this Agreement or the Contemplated Transactions, and no broker, finder, agent or similar intermediary is entitled to any broker’s, finder’s or similar fee or other commission in connection therewith based on any agreement, arrangement or understanding with the Company.

3.21          Major Customers. Schedule 3.21 contains a true, correct and complete list of the twenty-five (25) largest (determined on the basis of the total dollar amount of sales) customers of the Company for the year ended December 31, 2013 and the eight (8) month of period ending on August 31, 2014 showing the total dollar amount of such business from each such customer during such period and whether such customer is an Affiliate or third party. Except as set forth on Schedule 3.21, none of the foregoing customers has provided the Company or any of its Subsidiaries with written notice that it will stop or materially decrease its use of the Company’s or any of its Subsidiaries business, products or services, or that it will implement changes in the terms and conditions in the provision of such use adverse to the Company, or is otherwise involved in, or is threatening, a dispute with the Company or any of its Subsidiaries.

3.22          Accounts Receivable. Schedule 3.22 is an aged list of the accounts receivable, notes and other amounts receivable from third parties, including customers and employees, arising from the conduct of the Business before the Closing, whether or not in the ordinary course, together with any unpaid financing charges accrued thereon (“Receivables”) as of the Closing Date showing the aging of such Receivables as follows: (a) 0-30 days, (b) 31-60 days, (c) 61-90 days, and (d) more than ninety (90) days. Except to the extent, if any, reserved for on the Balance Sheet, all Receivables reflected on the Balance Sheet arose from, and the Receivables existing as of the Closing (subject, in the case of Receivables arising since the date of the Balance Sheet, to a reasonable allowance for bad debts) will have arisen from, the sale of inventory or services to Persons not affiliated with the Company or any of its Subsidiaries and in the ordinary course of business consistent with past practice and, except as reserved against on the Balance Sheet, constitute or will constitute, as the case may be, only valid, undisputed claims of the Company or any of its Subsidiaries not subject to valid claims of setoff or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice.

3.23          Inventories. A list of the Company’s inventory and the inventory of each of its Subsidiaries as of the date hereof is set forth on Schedule 3.23 attached hereto (the “Inventory”). All of the Inventory can be used or consumed in the ordinary course of business as now conducted. Since December 31, 2013, there has been no change in the amount of such Inventory of the Company and each of its Subsidiaries except for changes as a result of the purchase and sale of, adjustment to, or consumption of Inventory in the ordinary course of business consistent with prior practice, including, but not limited to, established seasonal patterns. All Inventory is owned by the Company and each of its Subsidiaries free and clear of all Encumbrances, and no Inventory is held on a consignment basis. The quantities of each item of Inventory (whether raw materials, work-in-process or finished goods) are reasonable in the present circumstances of the Company and consistent with past practices of the Company and each of its Subsidiaries.

3.24          Complete Disclosure. No representation or warranty by the Company in this Agreement, and no exhibit, schedule, statement, certificate or other writing furnished to Purchaser pursuant to this Agreement or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein and therein in the context in which they were made not misleading. There is no fact, development or threatened development which the Company has not disclosed to Purchaser in writing and

which is having or is likely to have a material adverse effect on the Company, its business, assets, operations or condition (financial or otherwise). The Company has provided or made available to Purchaser true, correct and complete copies of all documents, including all amendments, supplements and modifications thereof or waivers currently in effect thereunder, described in the Disclosure Schedule.

                                                                                                                                                        ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Sellers as follows:

4.1              Due Incorporation; Authority. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada. The Purchaser has all requisite corporate power and authority to enter into, execute and deliver this Agreement and any other documents to which it is a party and to perform fully its obligations hereunder and thereunder. The Purchaser has taken all actions necessary to authorize it to execute and deliver and perform fully its obligations under this Agreement and any other documents to which it is a party and to consummate the Contemplated Transactions. This Agreement has been validly executed and delivered by the Purchaser and constitutes a valid and binding obligation of the Purchaser, enforceable against such party, as applicable, in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws relating to the enforcement of creditors’ rights generally and to general principles of equity.

4.2              Investment Representations4.3. Purchaser understands that the Sellers have agreed to sell the Shares to Purchaser in reliance upon Purchaser’s representation to the Sellers that the Shares are being acquired by Purchaser for investment for Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof without registration or qualification under applicable federal and state securities laws. Purchaser acknowledges that it can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. Purchaser understands that the Shares are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Sellers in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. Purchaser understands that no public market exists for any of the securities issued by the Company and that there is no assurance that a public market will ever exist for the Shares.

                                                                                                                                                          ARTICLE V

COVENANTS OF THE PARTIES

The parties hereto covenant and agree as follows:

5.1              Confidential Information. From and after the Closing, each Seller shall keep secret and retain in strictest confidence, and not use for the benefit of such Person or any Person other than the Company and its Affiliates, all confidential matters and trade secrets of the Company or any of its Subsidiaries known to him, her or it relating to the Business (“Confidential Information”); provided, however, that the Sellers may disclose such Confidential Information if required by applicable Law or pursuant to an Order. Confidential Information shall not include (a) information which is or becomes generally known to the public through no act or omission of the Sellers, (b) information that was or is independently developed by one or both Sellers not in the course of their employment with (or service as a director or owner of) the Company or any successor entity and without any use of the Confidential Information of the Company, as demonstrated by files created by such Seller in the ordinary course of

business at the time of such independent development, (c) is disclosed generally to third parties by the Company or the Purchaser without restrictions similar to those contained in this Agreement, (d) is disclosed with the prior written approval of the Purchaser or (e) information which has been or hereafter is lawfully obtained by a Seller from a source other than the party to whom such Confidential Information belongs (or any of its Affiliates or their respective officers, directors, managers, employees, equity holders or agents) so long as, in the case of information obtained from a third party, such third party was or is not, directly or indirectly, subject to an obligation of confidentiality owed to the party to whom such confidential information belongs or any of its Affiliates at the time such Confidential Information was or is disclosed to the other party. Notwithstanding the foregoing, each Seller is permitted to disclose Confidential Information to (A) its advisors, but only to the extent reasonably necessary in order for such party to perform its obligations and exercise its rights and remedies under this Agreement, and (B) customers, suppliers, potential customers, suppliers and other Persons in the ordinary course of operating the Business, consistent with past practices, provided, that, in each case, and such party will take all such action as is necessary and customary in order to ensure that each of such persons maintains the confidentiality of any confidential information that is so disclosed; and make additional disclosures of or use for its own benefit Confidential Information, but only if and to the extent that such disclosures or use are specifically contemplated by this Agreement.

5.2              Publicity. Unless otherwise required by any Authority, by applicable Law or the rules of any securities exchange that may be applicable, no publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued without advance written approval of the form and substance thereof by each Seller and the Purchaser.

                                                                                                                                                        ARTICLE VI

TAX MATTERS

6.1              Tax Covenants. The following provisions shall govern the allocation of responsibility as between the Purchaser, the Company, and the Sellers for certain tax matters following the Closing Date:

(a)                Post-Closing. The Purchaser shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company and each of its Subsidiaries which are filed after the Closing Date; provided, however, that the Sellers shall have an opportunity to review and comment on such Tax Returns if the Sellers have an indemnification obligation under Section 8.2 with respect to such Tax Returns. For purposes of this Agreement, Pre-Closing Taxes for any Straddle Periods shall be determined assuming that payment has been made in a manner without regard to penalties, interest or other amounts resulting from the failure to pay such Taxes in a timely manner unless such failure is due, all or in part, to the actions or inaction of the Sellers. The Company shall be entitled to reimbursement of all Taxes paid pursuant to this Section 6.1(a) for Pre-Closing Tax Periods. The Purchaser and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Article VI and any audit, litigation or other proceeding with respect to Taxes (any such proceeding, a “Tax Proceeding”). Such cooperation shall include the retention and (upon the other party’s reasonable request) the provision of records and information which are reasonably relevant to any such audit, actual or threatened litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Purchaser agrees (A) to retain all books and records with respect to Tax matters pertinent to the Company relating to any Tax period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Company or either Seller, any extensions thereof) of the respective Tax periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the Sellers reasonable written notice prior to transferring, destroying or discarding any such books and records and, if either Seller so requests, the Company shall allow that Seller to take possession of such books and

records. The Purchaser shall have the right to control the conduct and resolution of any Tax Proceeding; provided, however, that if a Tax Proceeding is with respect to Taxes attributable to a Pre-Closing Tax Period for which the Sellers may be liable for a material amount under this Agreement, then the Sellers shall have the right to participate in such Tax Proceeding at their own expense and, in such case, the Purchaser shall not settle any such Tax Proceeding without the Sellers’ written consent, which shall not be unreasonably withheld, delayed or conditioned. The Purchaser and the Sellers further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the Contemplated Transactions).

(b)               Closing of the Books.  Unless closing of the books on the Closing Date takes place automatically by operation of Code section 1362(e)(6)(D), Purchaser will cause the Company to elect to close its books as of the date of the transfer pursuant to Code section 1377(a)(2), and Sellers hereby consent to such election.

(c)                Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement (together with the cost of preparation and filing any related Tax Returns) shall be paid by the Sellers when due, and the Sellers will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable law, the Purchaser and/or the Company will join in the execution of any such Tax Returns and other documentation.

                                                                                                                                                      ARTICLE VII

CONDITIONS TO CLOSING

7.1              Conditions to the Obligations of each Party. The obligations of the Purchaser, the Company, and the Seller to consummate the Contemplated Transactions are subject to the satisfaction of the following conditions:

(a)                No provision of any applicable Law and no Order shall prohibit the consummation of the Contemplated Transactions as of the Closing.

(b)               Each other party to this Agreement shall have executed and delivered each of the ancillary agreements, documents and instruments required to be delivered by it at the Closing pursuant to Section 1.4.

7.2              Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to consummate the Contemplated Transactions are subject to the satisfaction of the following further conditions:

(a)                The Company and each Seller shall have performed all of their obligations hereunder required to be performed by them on or prior to the Closing Date, and (ii) the representations and warranties of the Company and each Seller contained in this Agreement shall be true and correct in all respects as of the date hereof and at and as of the Closing Date as though made at and as of the Closing Date (or to the extent expressly made as of an earlier date, as of such date).

(b)               The Company shall have received all Licenses, consents, authorizations or approvals from, and shall have filed all notices and materials with, any Authority that are listed on Schedule 3.4 in connection with the consummation of the transactions contemplated hereby, in each case in form and

substance previously agreed to by the Company and the Purchaser, and no such License, consent, authorization or approval shall have been revoked.

(c)                No Litigation by or before any Authority shall be pending or threatened (i) against the Company or its Assets, or (ii) which questions the validity or legality of the Contemplated Transactions or any aspect thereof, or seeks to restrain the Contemplated Transactions or any aspect thereof or to recover any damages in connection therewith.

(d)               The Company shall have obtained all Required Consents.

(e)                The Purchaser shall have, in its sole discretion, completed its legal, financial and commercial due diligence to its reasonable satisfaction.

7.3              Conditions to the Obligations of the Company and the Sellers. The obligations of the Sellers to consummate the Contemplated Transactions are subject to the satisfaction of the following further conditions: (a) the Purchaser shall have performed all of its obligations hereunder required to be performed by it at or prior to the Closing Date and (b) the representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all respects as of the date hereof and at and as of the Closing Date as though made at and as of the Closing Date (or, to the extent expressly made as of an earlier date, as of such date).

                                                                                                                                                   ARTICLE VIII

SURVIVAL; INDEMNIFICATION

8.1              Survival. All representations, warranties, covenants, and obligations in this Agreement, the Disclosure Schedule and any other certificate or document delivered pursuant to this Agreement will survive the Closing, subject to applicable time limitations set forth in Section 8.3. The right to indemnification, payment of Losses or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. Unless otherwise agreed to in a separate written agreement, the waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Losses, or other remedy based on such representations, warranties, covenants, and obligations, provided that if a party proceeds to consummate the Closing notwithstanding the failure of a condition precedent to that party’s obligation to close, then such party’s recourse shall be limited to a claim for a breach of a representation and warranty rather than a claim based on the failure of the covenant or condition.

8.2              Indemnification and Payment of Losses by the Sellers. Subject to applicable limitations in time and amount set forth in Sections 8.4 and 8.5, the Sellers, after the Closing, will indemnify and hold harmless the Purchaser, its successors and assigns in interest, and each of their respective officers, directors, partners, stockholders, employees, agents, advisors, controlling persons, and affiliates (collectively, the “Purchaser Indemnitees”) for, and will pay to the Purchaser Indemnitees the amount of, any Losses, arising, directly or indirectly, from or in connection with:

(i)             any breach of any representation or warranty contained in ARTICLE II or ARTICLE III of this Agreement or any representation or warranty of the Company or the Sellers contained in any other document or any other certificate delivered by either Seller (on behalf of the Company or in his or capacity as an officer or stockholder of the Company), or the Company pursuant to this Agreement

with respect to such representations or warranties, disregarding (solely for purposes of determining the Losses but not for determining whether or not any such breach has occurred) all qualifications and exceptions contained therein including the phrase “in all material respects” or any equivalent phrase;

(ii)           any breach by the Company or the Sellers of any covenant or obligation of the Company or the Sellers contained in this Agreement or any other document or certificate delivered by or on behalf of the Company or the Sellers;

(iii)             any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with the Company (or any Person acting on its behalf) in connection with any of the Contemplated Transactions;

(iv)             any Pre-Closing Taxes; and

(v)               any Indebtedness of the Company existing at Closing.

Notwithstanding the foregoing, the indemnification obligation of each Seller to indemnify the Purchaser with respect to any breach of a covenant, representation of warranty of the Sellers set forth in ARTICLE II shall extend only to Losses occasioned by a breach by that Seller of his own covenants, representations and warranties.

8.3              Time Limitations. The representations and warranties of the Purchaser, the Company and the Sellers in this Agreement (i) will survive the Closing and (ii) will continue until the date that is eighteen (18) months from the Closing Date (the “Termination Date”), at which time all representations and warranties will expire; provided, however, (A) the Sellers will continue to have liability pursuant to Section 8.2 with respect to the representations and warranties contained in ARTICLE II, Sections 3.1 (Organization; Authority; Due Authorization), 3.2 (Capitalization of the Company and Subsidiaries) and 3.5 (Sufficiency of and Title to Assets) indefinitely, and (B) the Sellers will continue to have liability pursuant to Section 8.2 with respect to the representations and warranties contained in Sections 3.7 (Taxes), 3.14 (Environmental Matters), 3.15 (Employee Matters) and 3.16 (ERISA/Employee Benefits) until the date that is sixty (60) calendar days after the underlying obligation is barred by the applicable period of limitation under federal and state Laws relating thereto (claims for indemnification pursuant to Section 8.2(i) with respect to the matters set forth in clauses (A) and (B), (collectively, the “Extended Representations and Warranties”).

8.4              Limitations on Amount – Company and Sellers. The Sellers will have no liability (for indemnification or otherwise) with respect to the matters described in Section 8.2(i) unless and until the total of all Losses incurred by the Purchaser Indemnitees under such Section exceeds an aggregate amount of Fifteen Thousand Dollars ($15,000) (the “Threshold”). After the total of all Losses incurred by the Purchaser Indemnitees with respect to matters described in Section 8.2(i) exceeds the Threshold, the Purchaser Indemnitees will be entitled to indemnification of all Losses (including those below the Threshold) with respect to the matters described in Section 8.2(i) up to a maximum (in the aggregate) of One Hundred Thousand Dollars ($100,000) (the “Cap”). Notwithstanding anything to the contrary herein, the Threshold and the Cap shall not apply to claims based on (a) fraud or intentional misrepresentation by the Company or any Seller in this Agreement; or (b) any Extended Representations and Warranties.

8.5              Setoff. To the extent either Seller has an indemnification obligation to Purchaser pursuant to this ARTICLE VIII, Purchaser may set off, at its option, any Losses hereunder against amounts then due and owing under the Note to such Seller or both of the Notes.

8.6              Procedure for Indemnification – Third Party Claims.

(a)                Promptly after receipt by an indemnified party under this ARTICLE VIII of notice of the commencement of any proceeding against it by a third party, such indemnified party will, if a claim is to be made against an indemnifying party under this ARTICLE VIII, give notice to the indemnifying party of the commencement of such claim, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnified party’s failure to give such notice.

(b)               If any proceeding referred to in Section 8.6(a) is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such proceeding, the indemnifying party will be entitled to participate in such proceeding and, to the extent that it wishes (unless the indemnifying party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such proceeding and provide indemnification with respect to such proceeding), to assume the defense of such proceeding with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this ARTICLE VIII for any fees of other counsel or any other expenses with respect to the defense of such proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such proceeding, other than reasonable costs of investigation; provided, however, that if there exists a conflict of interest that would make it inappropriate in the written legal opinion of counsel for the indemnified party for the same counsel to represent both the indemnified party and the indemnifying party, then the indemnified party shall be entitled to retain its own counsel in each jurisdiction for which the indemnified party determines counsel is required, at the expense of the indemnifying party. If the indemnifying party assumes the defense of a proceeding, (i) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party’s consent, which consent shall not be unreasonably withheld or delayed, unless (A) there is no finding or admission of any violation of Law or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (C) such compromise or settlement shall include an unconditional release of the indemnified party from all liabilities arising out of such claim. If notice is given to an indemnifying party of the commencement of any proceeding and the indemnifying party does not, within twenty (20) days after the indemnified party’s notice is given, give notice to the indemnified party of its election to assume the defense of such proceeding, the indemnifying party will be bound by any determination made in such proceeding so defended or any compromise or settlement effected, provided that no compromise or settlement of such claims may be effected by the indemnified party without the indemnifying party’s consent, which consent shall not be unreasonably withheld or delayed, unless such compromise or settlement shall include an unconditional release of the indemnifying party from all liabilities arising out of such claim. The indemnifying party and indemnified party will cooperate with each other in the defense of any third party claim subject to indemnification hereunder.

(c)                Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a proceeding may materially and adversely affect it or its Affiliates, other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise, or settle such proceeding, but the indemnifying party will not be bound by any determination of a proceeding so defended or any compromise or settlement effected without its consent which shall not be unreasonably withheld or delayed, unless such compromise or settlement shall include an unconditional release of the indemnifying party from all liabilities, monetary or otherwise, arising out of such claim.

8.7              Procedure for Indemnification – Other Claims. A claim for indemnification for any matter not involving a third-party claim must be asserted by written notice delivered in accordance with Section 8.6(a) to the party from whom indemnification is sought which notice shall specify in reasonable detail the factual basis for such claim and either the fixed amount of Losses resulting from such claim, or if the Losses have not been finally determined, a good faith estimate of the amount of such Losses along with a statement of the basis for such estimate.

8.8              Claims Against the Company. Each Seller (a) expressly waives any rights of indemnification of such Seller against the Company for acts, circumstances, and events that give rise to indemnification obligations of such Seller arising under this ARTICLE VIII, and (b) agrees and acknowledges that he will have no right of contribution from, or right of subrogation against, the Company in the event he is required to take, or refrain from taking, any action, whether by the payment of money or otherwise, as a result of this ARTICLE VIII.

                                                                                                                                                        ARTICLE IX

MISCELLANEOUS

9.1              Notices. All notices, consents, waivers, requests and other communications hereunder shall be in writing and shall be delivered by courier or other means of personal service (including by means of an internationally recognized courier service or a professional messenger service), or sent by facsimile or mailed first class, postage prepaid, by certified mail, return receipt requested, in all cases, addressed as follows:

 

(i)                 If to Sellers, to:

Mr. Madhu Mathew Mammen

100 Julia Court

Lexington, S.C. 29072

Facsimile:____________________

 

Mr. Imad Siddiqui

2457 Valhalla Dr. NE

Atlanta, GA 30345

Facsimile:____________________

 

(with a copy, which shall not constitute notice, to)

 

Eaton Peabody

P.O. Box 1210

80 Exchange Street

Bangor, ME 04402-1210

Attention: Daniel G. McKay, Esq.

Facsimile: (207) 942-3040

 

(ii)               If to the Purchaser, to:

Oncologix Tech, Inc.

1604 West Pinhook Drive, Suite 200

Lafayette, LA 70508

Attention: Roy W. Erwin, Chief Executive Officer

Facsimile: (616) 977-9955

 

(with a copy, which shall not constitute notice, to)

 

Posternak Blankstein & Lund LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199-8004

Attention: David M. Barbash, Esq.

Facsimile: (617) 367-2315

All notices, requests and other communications shall be deemed given on the date of actual receipt or delivery as evidenced by written receipt, acknowledgment or other evidence of actual receipt or delivery to the address or a receipt generated by the sender’s fax machine showing that such communication was sent to the appropriate fax number on a specified date, if sent by facsimile; provided that if the date of receipt is not a Business Day (and, in the case of delivery by facsimile if not received prior to the end of the normal Business Day of the recipient), then on the first Business Day of the recipient after the date of such receipt. In case of service by facsimile, a copy of such notice shall be personally delivered or sent by registered or certified mail, in the manner set forth above, intended for receipt within three (3) Business Days thereafter (provided that the failure to do so shall not prevent such notice from being effective upon receipt as noted above). Either party hereto may from time to time by notice in writing served as set forth above designate a different address or a different or additional person to which all such notices or communications thereafter are to be given.

9.2              Entire Agreement. This Agreement (including without limitation the schedules and exhibits hereto) and the agreements, documents and instruments to be executed and delivered pursuant hereto embody the final, complete and exclusive agreement among the parties with respect to the sale of the Shares and the Contemplated Transactions; supersede all prior letters of intent, agreements, understandings and representations (whether written or oral) with respect thereto; and may not be contradicted by evidence of any such prior agreement, understanding or representation, whether written or oral.

9.3              Governing Law and Venue. This Agreement is to be governed by and construed in accordance with the laws of the State of South Carolina applicable to contracts made and to be performed wholly within such state, and without regard to the conflicts of laws principles thereof. Any suit brought hereon and any and all legal proceedings to enforce this Agreement, whether in contract, tort, equity or otherwise, shall be brought in the courts of the State of South Carolina, the courts of the State of Louisiana, the United States District Court sitting in South Carolina or the United States District Court sitting in Rapides Parish, Louisiana, the parties hereto hereby waiving any claim or defense that such forum is not convenient or proper.

9.4              Binding Effect. This Agreement and the rights, covenants, conditions and obligations of the respective parties hereto and any instrument or agreement executed pursuant hereto shall be binding upon the parties and their respective successors, assigns and legal representatives. Neither this Agreement, nor any rights or obligations of any party hereunder, may be assigned by a party without the prior written consent of the other party, provided, however, that (a) each of the Purchaser and the Company shall have the right to assign its rights hereunder to any lender providing financing to the Purchaser, the Company or any of their respective affiliates for collateral security purposes and (b) the Purchaser shall have the right to assign its rights and obligations under this Agreement, in whole or in part, to an Affiliate or to designate any of its Affiliates (to the extent permitted by Law) to receive directly the Shares to be purchased hereunder or to exercise any of the rights of the Purchaser, or to perform any of its obligations.

9.5              Miscellaneous. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument, and delivery of an executed counterpart by fax, pdf or other electronic means shall be equally effective as delivery of an original, manually executed counterpart of this Agreement. The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof. All references in this Agreement to Articles, Sections, Exhibits or Schedules refer to Articles or Sections of, or Exhibits or Schedules to, this Agreement unless otherwise specified. Where the context or construction requires, all words applied in the plural shall be deemed to have been used in the singular, and vice versa; the masculine shall include the feminine and neuter, and vice versa; and the present tense shall include the past and future tense, and vice versa. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. Except as otherwise expressly set forth in this Agreement, nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any Persons other than the parties to it and their respective successors in interest and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third Persons to any party to this Agreement, nor shall any provision give any third Persons any right of subrogation or action over against any party to this Agreement. Except as otherwise expressly set forth in this Agreement, no provision in this Agreement shall create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of the Company in respect of continued employment (or resumed employment) with the Company and no provision shall create any such rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any Employee Plan or Benefit Arrangement or any plan or arrangement that may be established by the Purchaser or any of its Affiliates. No provision of this Agreement shall constitute a limitation on rights to amend, modify or terminate after the Closing Date any Employee Plan or Benefit Arrangement.

9.6              Expenses. Each party shall bear its own direct and indirect expenses.

9.7              Amendments; No Waivers. Any provision of this Agreement (including the Disclosure Schedules) may be amended if, and only if, such amendment is in writing and signed by the Purchaser and the Seller. Any provision of this Agreement may be waived if the waiver is in writing and signed by the party to be bound. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other of further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise expressly provided for herein, the rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

9.8              Further Assurances. From time to time after the Closing, at the request of the Purchaser and without further consideration, the Seller will execute and deliver to the Purchaser such other documents, and take such other action, as the Purchaser may reasonably request in order to consummate more effectively the transactions contemplated hereby and to vest in the Purchaser good, valid and marketable title to the Shares.

9.9              Definitions. Terms not otherwise defined herein shall have the meaning ascribed thereto in Exhibit D attached hereto.

[signature page follows]

 

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have duly executed this Stock Purchase Agreement as an instrument under seal as of the day and year first above written.

THE COMPANY:

 

ESTEEMCARE, INC.

 

By:

Madhu Mathew Mammen

President

 

PURCHASER:

 

ONCOLOGIX TECH, INC.   By: Roy W. Erwin Chief Executive Officer

SELLERS:

Madhu Mathew Mammen     Imad Siddiqui

 

 

EXHIBIT D

DEFINITIONS

For purposes of the Agreement, in addition to all other terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” of a Person means a Person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person and “control” means, with respect to any Person, the direct or indirect ability to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Assets” means the assets, properties and rights of every nature, kind and description, whether tangible or intangible, personal or mixed, which are (i) owned by the Company or in which the Company has any interest (including the right to use) or (ii) used by the Company in the operation of the Business.

“Authority” means any governmental, regulatory or administrative body, agency or authority, and any court or other judicial authority, in each case whether Federal, state, local or foreign.

“Benefit Arrangement” means any employment, severance or similar contract, arrangement or policy and each plan or arrangement providing for severance, insurance coverage (including any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, pension or retirement benefits or for deferred compensation, profit-sharing, bonuses, phantom stock, options, stock appreciation rights or other forms of incentive compensation or post-retirement insurance, compensation or benefits or any co-employment agreement that (i) is not an Employee Plan, (ii) is entered into, maintained or contributed to, as the case may be, by the Company or any of its ERISA Affiliates and (iii) covers any Employee or former Employee of the Company.

“Business Day” means a day on which banks are open for business in both Lafayette, Louisiana and Columbia, South Carolina.

“Code” means the Internal Revenue Code of 1986, as amended.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq.

“Contemplated Transactions” means all of the transactions contemplated by this Agreement, including, without limitation, (a) the sale of the Shares by the Sellers to the Purchaser and (b) the performance by the parties hereto of their respective obligations and covenants under this Agreement.

“Employee” means any employee of the Company.

“Employee Plan” means each “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA and (ii) is maintained or contributed to by the Company or any of its ERISA Affiliates, as the case may be.

“Encumbrance” means any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction on voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“Environmental Law(s)” means all Laws (including common law), now or hereafter in effect and as amended, any judicial or administrative order, consent decree or judgment applicable to the Business or

the real property used by the Business relating to the environment, health, safety, natural resources or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; and any similar state or local Law and the regulations adopted from time to time pursuant to said laws.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

“GAAP” means generally accepted accounting principles in the United States.

“Hazardous Substances” means (a) petroleum and petroleum products, radioactive materials, asbestos and asbestos-containing materials, urea formaldehyde, including foam insulation that contains urea formaldehyde, polychlorinated biphenyls including transformers or other equipment that contain polychlorinated biphenyls, (b) any other chemicals, materials or substances defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants” or “pollutants”, or words of similar import, under any of the applicable Environmental Laws and (c) any other chemical, material or substance which is regulated by any Environmental Law.

“Indebtedness” of any Person means and includes, without duplication, (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (b) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument, debt security or other similar instrument, (c) indebtedness secured by an Encumbrance on assets or properties of such Person, (d) obligations or commitments to repay deposits or other amounts advanced by and owing to third parties, or (e) with respect to any indebtedness, obligation, claim or liability of a type described in clauses (a) through (d) above, all accrued and unpaid interest, premiums, penalties, breakage costs, unwind costs, fees, termination costs, redemption costs, expenses and other charges with respect to any thereof, to the extent actually incurred and not paid or accrued. For the avoidance of doubt, Indebtedness shall not, however, include (x) accounts payable to trade creditors or (y) accrued expenses arising in the ordinary course of business.

“Intellectual Property Assets” means all of the following that are owned or used by the Company (or in which the Company has an interest, including a license or other right of use): (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets, (f) all computer software (including source code, executable code, data, databases, and related documentation), (g) all advertising and promotional materials, (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium).

“Intellectual Property License” means each contract, agreement or other arrangement to which the Company is party as licensee or licensor relating to any Intellectual Property Asset excluding in each case any “shrink wrap” or “click wrap” or similar standard form license or agreement applicable to mass

marketed software applications that are generally available with minimal customization to other companies in the industry and pursuant to which the Company has acquired a perpetual license or pursuant to which license, service and maintenance fees do not exceed $10,000 on an annual basis.

“Knowledge” when used in the phrases “to the Company’s Knowledge” or words of similar import shall mean the actual knowledge of a particular fact, circumstance, event or other matter by a Seller or, with respect to a Seller, such knowledge as the Seller should reasonably be expected to have given his duties, responsibilities and obligations within the Company and upon his inquiry and investigation as would be reasonable for that Seller to make under the circumstances

“Law” means any law, statute, regulation, ordinance or other binding action, announcement or requirement of an Authority.

“Liabilities” means all obligations, commitments and other liabilities (or contingencies that have not yet become liabilities) of a Person (whether absolute, accrued, contingent, based on any contingency, known or unknown, fixed or otherwise) or due or to become due.

“License” means any license, permit, approval, certificate, authorization and similar authorization issued by an Authority.

“Losses” means all losses, liabilities, claims, actions, causes of action, awards, judgments, payments, costs, expenses, interest, penalties, fines and other damages (including consequential, punitive, special, and incidental damages and diminution in value), all costs and expenses of investigating and defending any third party claim, lawsuit or arbitration and any appeal therefrom (including reasonable attorneys’ fees) and all amounts paid (including the direct and indirect costs and expenses associated with providing property or services) incident to any compromise or settlement of any such claim, lawsuit or arbitration, in each case, whether or not involving a third-party claim.

“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Authority.

“Organizational Documents” means (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of organization and the operating agreement of any limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing.

“Permitted Liens” means (i) Encumbrances with respect to Taxes that are not yet delinquent; (ii) Encumbrances of landlord’s, repairmen or bailees or similar liens; (iii) Encumbrances of materialmen or mechanics, provided, however, that such Encumbrances were incurred in the ordinary course of the Business in respect of obligations which are not overdue and for which adequate provision has been made in accordance with GAAP; (iv) pledges or deposits to secure obligations under workmen’s compensation, social security or unemployment compensation laws or similar legislation; and (v)  zoning, building and other similar Laws, none of which individually or in the aggregate, materially impairs the continued use and operation of property subject to a Lease in the conduct of the Business as currently conducted.

“Person” means any entity, corporation, company, association, joint venture, joint stock company, limited liability company, partnership, trust, organization, individual (including personal representatives, executors and heirs of a deceased individual), Authority, trustee, receiver or liquidator.

“Pre-Closing Taxes” means Taxes attributable to Pre-Closing Tax Periods. In the case of any Taxes that are imposed on a periodic basis and are payable for a Straddle Period, the portion of such Tax

that constitutes Pre-Closing Taxes shall (x) in the case of any Taxes other than Taxes based upon or related to income or receipts (including, but not limited to, any franchise, sales or use (including ad valorem or value added) or payroll tax that is based on income or receipts), be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Pre-Closing Tax Period and the denominator of which is the number of days in the entire taxable period (with appropriate adjustments made in the event that any property upon which such Tax is based, whether real, personal or intangible, is disposed of, acquired or modified after the Closing Date), and (y) in the case of any Tax based upon or related to income or receipts (including, but not limited to, any franchise, sales or use (including ad valorem or value added) or payroll tax that is based on income or receipts), be deemed equal to the amount which would be payable if the relevant Tax period ended at the end of the Closing Date.

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date or, with respect to any Straddle Period, that portion of the taxable period that ends on the Closing Date.

“Remedial Action” shall mean all action to (a) clean up, remove, or remediate Hazardous Substances; (b) prevent the release of Hazardous Substances so that they do not migrate, endanger or threaten to endanger public health or the environment; or (c) perform remedial investigations, feasibility studies, corrective actions, closures and post-remedial or post-closure studies, investigations, maintenance of a remedy, operating and monitoring of a remedy and monitoring.

“Securities Act” means the Securities Act of 1933, as amended.

“Straddle Period” means any taxable period that includes the Closing Date and ends after the Closing Date.

“Subsidiary” or “Subsidiaries” means AME and any other corporation, firm, enterprise, limited liability company, partnership, joint venture or other entity in which the Company owns, directly or indirectly, any capital stock, membership interest, partnership interest or other equity interest but excluding any passive investment in a publicly held entity representing less than 2% of the total number of outstanding shares or investment units of that entity.

“Tangible Personal Property” means all computers, machinery, equipment, furniture, fixtures, supplies, spare parts, tools, stores and other tangible personal property (other than books and records of the Company and other than raw materials, work-in process, finished goods and other inventory of the Company) owned by the Company.

“Tax Returns” means, collectively all Federal, state, foreign and local tax reports, returns, information returns and other related documents (including, but not limited to, any schedule or attachment thereto) required to be filed by any relevant taxing Authority.

“Taxes” means, collectively all taxes, including, without limitation, income, gross receipts, net proceeds, alternative, add-on, minimum, ad valorem, value added, turnover, sales, use, property, personal property (tangible and intangible), stamp, leasing, excise, duty, franchise, transfer, license, withholding, payroll, employment, fuel, excess profits, environmental, occupational, interest equalization, windfall profits and severance taxes, and all other like governmental charges, together with any interest, penalties or additions to tax imposed with respect thereto.

 

 

Exhibit 10.3

PROMISSORY NOTE

 

 

September 25, 2014		Principal Amount
Lafayette, Louisianna		$75,000.00

 

 

FOR VALUE RECEIVED, ONCOLOGIX TECH, INC., a Nevada corporation (“Buyer”), by this Promissory Note (this “Note”), hereby promises to pay to Madhu Mathew Mammen, a resident of South Carolina (“Seller”), the aggregate principal sum of Seventy-Five Thousand and 00/100 Dollars ($75,000.00), together with interest thereon, in the manner provided herein.

1.                  Installment Payments. Subject to Section 3 herein, Buyer shall repay the principal balance and interest thereon in twelve (12) equal monthly installment payments on the twenty-fifth (25^th) day of each calendar month (each a “Monthly Payment Date”), commencing on October 25, 2014. If a Monthly Payment Date should fall on a day that is not a business day in Lafayette, Louisiana, payment of the outstanding principal and all accrued and unpaid interest shall be made on the next succeeding business day in Lafayette, Louisiana, and such extension of time shall be included in computing any interest in respect of such payment. Principal and interest are payable in lawful money of the United States of America.

2.                  Interest. Interest shall accrue on the unpaid principal balance at an interest rate of six percent (6%), based on a 365-day year, for the actual number of days elapsed since the date to which interest has been paid.

3.                  Payments of Principal and Interest.

a.                   On each Monthly Payment Date, Buyer shall pay Seller an installment payment of combined principal and interest in the amount set forth in the amortization schedule attached hereto as Exhibit A.

b.                  Buyer may prepay all or any portion of the outstanding principal under this Note, at any time without premium, penalty or other fees.

c.                   This Note is made and delivered by Buyer to Seller pursuant to the terms of a Stock Purchase Agreement (the “Purchase Agreement”) dated as of the date hereof among Buyer, Seller, Imad Siddiqui and Esteemcare, Inc., a South Carolina corporation (“Esteemcare”), and is subject to the terms and conditions set forth therein, including Buyer’s right to deduct or set-off from any payments due under this Note, any amounts due Buyer under and in accordance with the terms of the Purchase Agreement, including such amounts arising out of indemnification claims pursuant to Article VIII of the Purchase Agreement.

d.                  All payments hereunder shall be made to Seller by check or wire transfer to the account provided by Seller.

4.                  Events of Default; Remedies. The following events shall constitute an “Event of Default”: (i) the occurrence and continuance of Buyer’s failure to pay any amount of principal or interest when due and payable under this Note continuing for a period of twenty (20) days after notice of such failure; provided, however, an Event of Default shall not have occurred and be continuing, to the extent that Buyer shall have deducted or set-off such payment in accordance with the terms of the Purchase Agreement; and further provided that Buyer shall not have failed to make a payment when due on more than three (3) occasions within the immediately preceding twelve (12) month period; (ii) Buyer applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for Buyer or any property of Buyer, or makes a general assignment for the benefit of creditors or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for Buyer and is not discharged within sixty (60) days; or (iii) any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of Buyer, and if such case or proceeding is not commenced by Buyer, it is consented to or acquiesced in by Buyer, or remains undismissed for sixty (60) days. Upon the occurrence and continuance of an Event of Default, Seller may by notice to Buyer, declare the entire aggregate principal of and accrued interest on this Note to be immediately due and payable, whereupon this Note and all accrued interest will thereupon immediately become due and payable.

 

5.                  General. Seller may not voluntary or involuntary transfer, assign, sell, pledge, hypothecate, or otherwise dispose of this Note or any interests in this Note, without the consent of Buyer, and provided that the transferee enters into an agreement with Buyer, confirming and agreeing that it is acquiring this Note subject to the restrictions on transfer set forth herein and the terms and conditions and restrictions of the Purchase Agreement, including the set-off and deduction provisions set forth therein.

6.                  Waivers. Buyer hereby: (a) waives diligence, presentment, demand for payment, notice of dishonor, notice of non-payment, protest, notice of protest, and any and all other demand in connection with the delivery, acceptance, performance, default or enforcement of this Note; (b) agrees that Seller shall have the right, without notice, to grant any extension of time for payment of any indebtedness evidenced by this Note or any other indulgence or forbearance whatsoever; (c) agrees that no failure on the part of Seller to exercise any power, right or privilege hereunder, or to insist upon prompt compliance with the terms of this Note, shall constitute a waiver of that power, right or privilege; and (d) agrees that the acceptance at any time by Seller of any past due amounts shall not be deemed to be a waiver of the requirement to make prompt payment when due of any other amounts then or hereafter due and payable hereunder.

7.                  Pledge of Stock. This Note is secured by a pledge by Buyer in favor of Seller of all of Buyer’s shares of capital stock of Esteemcare, pursuant to a certain Stock Pledge Agreement of even date herewith and all amendments, modifications, supplements, substitutions, additions, renewals, replacements and extensions thereof. This Note and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination Agreement, dated as of September 25, 2014, by and among Buyer, Seller, Amian Angels, Inc., a Louisiana corporation, Dotolo Research Corporation, a Louisiana corporation, Esteemcare, Affordable Medical Equipment Solutions, Inc., a Florida corporation, and TCA Global Credit Master Fund LP, a limited partnership organized under the laws of the Cayman Islands.

8.                  Miscellaneous. This Note shall be governed in all respects by the laws of the State of South Carolina. Buyer covenants, and by the acceptance of this Note, Seller also covenants, that each irrevocably: (a) waives, to the fullest extent permitted by law, any and all right to trial by jury in any legal proceeding arising out of this Note or any of the transactions contemplated hereby; (b) submits to the personal jurisdiction of the courts of the State of South Carolina, the courts of the State of Louisiana, the United States District Court sitting in South Carolina or the United States District Court sitting in Rapides Parish, Louisiana, as well as the jurisdiction of all courts from which an appeal may be taken from such courts; and (c) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the State of South Carolina or the State of Louisiana. All obligations and agreements hereunder of Buyer and Seller shall be binding upon Buyer, Seller and their respective successors and permitted assigns. Notwithstanding any term or provision herein that may be interpreted to the contrary, the total amount of interest and sums in the nature of interest collected or permitted hereunder shall not exceed the maximum amount allowed by the laws of the State of South Carolina. Any sum in excess of such maximum amount that may have been prepaid or paid after the date hereof shall be refunded or credited to Buyer. Any such credit may be made by application of the amount thereof against the sums due from Buyer hereunder. None of the terms or provisions of this Note may be excluded, modified or amended except by a written instrument duly executed on behalf of Seller and Buyer expressly referring hereto and setting forth the provisions so excluded, modified or amended.

IN WITNESS WHEREOF, the undersigned has executed this Note under seal as of the date first set forth above.

 

 

 

WITNESS:			ONCOLOGIX TECH, INC.
			By:
Name:				Roy W. Erwin
				Chief Executive Officer

 

Exhibit A

 

Amortization Schedule

 

[See attached.]