0001000096-13-000041.txt : 20130327 0001000096-13-000041.hdr.sgml : 20130327 20130327154956 ACCESSION NUMBER: 0001000096-13-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130322 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130327 DATE AS OF CHANGE: 20130327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Oncologix Tech Inc. CENTRAL INDEX KEY: 0000799694 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 861006416 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15482 FILM NUMBER: 13719891 BUSINESS ADDRESS: STREET 1: P.O. BOX 8832 CITY: KENTWOOD STATE: MI ZIP: 49518-8832 BUSINESS PHONE: 616-977-9933 MAIL ADDRESS: STREET 1: P.O. BOX 8832 CITY: KENTWOOD STATE: MI ZIP: 49518-8832 FORMER COMPANY: FORMER CONFORMED NAME: BESTNET COMMUNICATIONS CORP DATE OF NAME CHANGE: 20001219 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INTERNATIONAL INC DATE OF NAME CHANGE: 19980225 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INC DATE OF NAME CHANGE: 19920703 8-K 1 oncologix8k3222013.htm FORM 8-K

 

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): March 22, 2013

 

 

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
incorporation or organization)   Identification No.) 

P.O. Box 8832

Grand Rapids, MI 49518-8832

(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 Material Definitive Agreements

 

(A)Stock Purchase Agreement. On March 22, 2013, entered into a Stock Purchase Agreement, dated as of March 22, 2013, (the “Agreement”) by and among Oncologix Tech Inc. (OCLG or Company), and Clearview Medical, LLC (Clearview), for Company to acquire 1,000 shares of Common Stock of Dotolo Research Corporation, which represents all of the issued and outstanding shares of Dotolo Research Corporation (filed herewith as Exhibit 10.1).
(B)Employment Agreement. Upon closing of the Stock Purchase Agreement, we entered into an Employment Agreement with Roy Wayne Erwin, (filed herewith as Exhibit 10.2). Mr. Erwin will serve as Chief Executive Officer and Chairman of the Board of Directors. Under the terms of the Agreement, the Company executed an Employment Agreement with Mr. Erwin which calls for a salary of $ 120,000 per year with a term of four (4) years and contains standard non-compete and disclosure agreements.

 

 

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ITEM 2.01 – Completion of Acquisition or Disposition of Assets.

 

On March 22, 2013, a closing was held pursuant to a Sales Purchase Agreement, dated as of March 22, 2013, (the “Agreement”) by and among Oncologix Tech Inc. (OCLG or Company), and Clearview Medical, LLC (Clearview), for Company to acquire 1,000 shares of Common Stock of Dotolo Research Corporation, which represents all of the issued and outstanding shares of Dotolo Research Corporation.

 

Pursuant to the Agreement, Clearview Medical, LCC sold all of the Common Stock of Dotolo Research Corporation for shares in the Company with an aggregate amount of 58,564 shares of a newly created Series D Preferred Stock (“New Preferred Shares”) being issued at their par value of $.001 which have a liquidation preference of $4,700,000. Clearview Medical, LLC is the owner of all of the shares of Dotolo Research Corporation, a corporation organized under the laws of the State of Florida, a manufacturer of medical device products principally used in colon cleansing and bowel preparation for Endoscopy, OB/GYN, marketed both domestic and internationally.

 

The New Preferred Shares shall be issued as soon as possible after the Closing Date, but no later than thirty (30) days after the closing date. Each share of New Preferred shall be convertible into 1,000 shares of common stock commencing one year after issuance and, until conversion, shall vote with the common on all matters and have the votes per share set forth below;

 

(a)                Each share of New Preferred shall proportionally adjust in the event of stock splits or the like;

 

(b)               Each share of New Preferred shall receive dividends as though it were converted to common stock; and,

 

(c)                The voting of the New Preferred shall be as follows: initially each share of New Preferred shall have 400 votes; on the first anniversary of their issuance, the voting power of each share of New Preferred shall increase to 800 votes; on the second anniversary of their issuance, the voting power of each share of New Preferred shall increase to 1,200 votes; on the third anniversary of their issuance, the voting power of each share of New Preferred shall increase to 1,600 votes; and on the fourth anniversary of their issuance, the voting power of each share of New Preferred shall increase to 2,000 votes where it shall remain until converted.

 

(d)                The holders of the new preferred shall be entitled to elect one member of the board of directors commencing six months after the closing.

 

Under the terms of the Agreement, Barry Griffith, the current Chairman and CEO of the Company, resigned from the Company and the Board of Directors, and the Company’s CFO and remaining member of the Board of Directors agreed to remain on the Board for a minimum period of 180 days.

 

Roy W. Erwin will assume the responsibilities of the Company as Chairman of the Board and Chief Executive Officer. Michael A. Kramarz will remain as the Chief Financial Officer.

 

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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.

 

Financial Condition of Dotolo Research Corporation (“DRC”), Lack of Audit, Need for additional Financing

 

DRC’s internally generated unaudited financial information indicate a small profit for the year ended August 31, 2012, but had incurred losses in the previous fiscal year. In addition, DRC has limited working capital with cash on hand of less than $1,000 at January 31, 2013. Since January 31, 2013, DRC has incurred indebtedness of $55,000 to meet its working capital needs. These two notes bear interest at 18% per annum and require minimum, monthly interest payments of $850.00. Additional financing will be required to get DRC to cash flow break even. Additional funding will also be required to grow and expand the company. Unless it is able to obtain additional financing, there is substantial doubt as to DRC continuing as a going concern. Management believes that as a public company, DRC will be able to meet its short term capital needs, but there are no commitments to provide funding and no assurance can be given that funding will be available on reasonable terms. Furthermore, DRC does not have audited financial information. 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 DRC.

 

Need for Additional Capital

 

We will need substantial funds to complete the development of new product introductions, manufacturing, and marketing of our products. Consequently, we will seek to raise further capital through not only possible public and private offerings of equity and debt securities, but also collaborative arrangements, strategic alliances, and equity and debt financings

from other sources. We now estimate the need to raise at least $500,000 of additional funding by the end of 2013 to fund working capital. 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.

 

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Uncertainties Regarding Healthcare Reimbursement and Reform

 

Our ability to execute our strategy in the medical markets depends in part on the extent to which healthcare services and products are paid by governmental agencies, private health insurers and other organizations, such as health maintenance organizations, for the cost of such products and related treatments. Our business could be harmed if healthcare payers and providers implement cost-containment measures and governmental agencies implement measures that reduce payment to our customers for their use of our products.

 

Industry Intensely Competitive.

 

The medical device industry is intensely competitive. While we maintain a strong market share in hardware and disposable products sales world-wide sales world-wide, there is no guarantee we can maintain that market share. We will compete with both public and private medical device and pharmaceutical companies that have a greater number of products on the market, have greater financial and other resources and have other competitive advantages. We cannot be certain that one or more of our competitors will not receive patent protection that dominates, blocks or adversely affects our product development or business; will benefit from significantly greater sales and marketing capabilities or will not develop products that are accepted more widely than ours.

 

Intellectual Property Risk.

 

Our ability to obtain and maintain patent and other protection for our products will affect our success. The patent positions of medical device companies can be highly uncertain and involve complex legal and factual questions. Future patent rights, if granted, may not be upheld in a court of law if challenged. Our patent rights may not provide competitive advantages for our products and may be challenged, infringed upon or circumvented by our competitors. We cannot patent our products in all countries or afford to litigate every potential violation worldwide. Because of the large number of patent filings in medical device, our competitors may have filed applications or been issued patents and may obtain additional patents and proprietary rights relating to products or processes competitive with or similar to ours. We cannot be certain that U.S. or foreign patents do not exist or will not issue that would harm our ability to commercialize our products and product candidates.

 

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Possible Failure to Comply with Government Regulations.

 

We, and any prospective contract manufacturers and suppliers are subject to extensive, complex, costly, and evolving governmental rules, regulations and restrictions administered by the FDA, by other federal and state agencies, and by governmental authorities in other countries. In the United States, our products are registered as a Class II device and cannot be marketed until they are approved for market by the FDA. Obtaining FDA market approval involves the submission, among other information, may require clinical studies on the product, and requires substantial time, effort and financial resources. The FDA, and other federal and state agencies, as well as equivalent agencies of other countries with whom we will export our products, will also perform pre-licensing inspections of our facility, if any, and our contract manufacturers' and suppliers' facilities. Our failure or the failure of our contract manufacturers or suppliers to meet FDA or other agencies' requirements would delay or preclude our ability to sell our products potentially having an adverse material effect on our business. Even with FDA market approval, we, as well as our partners, contract manufacturers and suppliers, are subject to numerous FDA requirements covering, among other things, testing, manufacturing, quality control, labeling and continuing review of medical products, and to permit government inspection at all times. Failure to meet or comply with any rules, regulations, or restrictions of the FDA or other agencies could result in fines, unanticipated expenditures, product delays, non-approval or recall, interruption of production, and criminal prosecution.

 

Exposure to Product Liability Claims.

 

Our design, testing, development, manufacture, and marketing of products involve an inherent risk of exposure to product liability claims and related adverse publicity. Although we believe that our product liability insurance is adequate, additional insurance coverage is expensive and in the future we may be unable to obtain additional liability coverage on acceptable terms. If we are unable to obtain sufficient insurance at an acceptable cost or if a successful product liability claim is made against us, whether fully covered by insurance or not, our business could be harmed.

 

Reliance on Key Personnel

 

Our success will depend, to a great extent, upon the experience, abilities and continued services of our executive officers and key management personnel. If we lose the services of any of these officers or key personnel, our business could be harmed. Our success also will depend upon our ability to attract and retain other highly qualified Regulatory, Marketing, Sales, and manufacturing personnel and our ability to develop and maintain relationships with key individuals in the industry. Competition to attract qualified personnel and relationships is intense and we compete with other companies in our industry. We may not be able to continue to attract and retain qualified personnel.

 

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

 

Our efforts to market our products 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.

 

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BUSINESS

 

General

 

Oncologix Tech, Inc. (“OCLG”), has acquired 100% of the shares of Dotolo Research Corporation, a FDA Registered, Class II, medical device manufacturer with 30 years of product sales in the hydro-colonic irrigation, bowel preparation market. Dotolo Research Corporation began operations in 1989 and is a world-wide leader in hardware and disposable products sales, and has an active customer base of over 900+ customers both domestically and internationally.

 

The Company designs, develops, manufactures and distributes the Toxygen hardware system with disposables speculums and tubing. The company has a valid Registration from the FDA as a Class II medical device, and is licensed by Health Canada, a CE mark for Europe, and is currently in compliance with ISO 9001:2000 and ISO 13485:2003 regulations. Our products primary use is for colon and bowel preparation prior to medical procedures such as a Colonoscopy and OB/GYN medical procedures and for individuals seeking health and wellness prevention and good colon health. There are currently over 18+ million colonoscopy procedures performed annually within the United States and our strategic mission is to become the preferred choice of colon cleansing and bowel preparation by both patients and medical professionals. Management believes its primary competitive strengths is its 30 year leadership position within the market of hydro-colonic irrigation, its on-going research and development of new technologies, exceptional quality controls, and world-wide distribution of all hardware and disposable products. The Company utilizes an indirect sales force to promote and sell the company products. Management believes that the Company must expand its manufacturing capacity and its’ distribution sales channels to be able to move into what management believes is a high growth market. The Management’s strategy in becoming a publicly held company in the United States is to enhance the Company’s capital raising abilities to fund increased manufacturing capacity, increase current inventory levels, improve payment terms with our core raw material suppliers to reduce our COGS, execution of new product designs on all hardware and disposable products, maintain Regulatory compliance, expansion of a sales and marketing team and additional acquisitions of companies in the medical device and healthcare markets.

 

Marketing

 

The Company's overall marketing strategy is to strengthen is current position in the health and wellness markets, leverage its brand reputation and 30 year history as a quality manufacturer of medical device products, and sell directly into the medical space. The marketing strategy of providing products to health and wellness spas has served the Company’s needs to date and has enabled us to obtain orders and operate while avoiding the costs associated with hiring marketing employees and direct sales representatives. However, future growth will require us to increase our product and brand awareness in the medical markets, hire a full time director of Sales and Marketing, establish additional clinical research on bowel preparations and leverage the existing clinical research performed by Dr. Joseph Fiorito et al. at Danbury Hospital utilizing the Dotolo Research products, increase our brand and marketing, our web presence, and strengthen our domestic and international distribution channels. The Company’s distribution model has resulted in the Company not having a single customer account for more than 10% of its total sales. The Company is seeking to expand its operations so that it can continue to service health and wellness customers but specifically sell products directly to Out-Patient Endoscopy Centers, Hospital systems, Veterans Administration Hospitals, Skilled Nursing Homes, and Sterile kit packing distributors which will provide more profitable sales orders.

 

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Domestic and International Payment Terms

 

Dotolo Research Corporation records revenue both domestically and internationally through indirect sales channels as products are sold to independent distributors or product re-sellers. Terms on all products sold are 50% of the total order, paid in advance, and the balance due prior to final shipment (FOB). These sales terms, to date, has allowed our company to experience extremely few collection problems on its domestic sales. International sales orders are via wire transfer and we have little to no payable receivable issues. Management believes that once we enter into the medical space we will experience payment terms of Net-45 which will require the company to increase its inventory levels on disposable products up to 30 day inventory supply levels.

 

Manufacturing

 

Dotolo Research Corporation procures raw materials from various sources and performs on-site manufacturing and final sub-assembly operations. The company does not outsource its manufacturing processes. Management believes that the skill level and experience of the Company’s work force as well as the Company’s operations allow it to meet current order demand but will need to ramp up skilled bench assembly workers and packaging employees when those orders from the medical markets commence. The Company's principal raw material is injection-molded plastic, medical grade respiration tubing, water-filtration parts, and hardware components such as metal housings, fitting and valves. The Company purchases its injection-molding raw materials from two (2) suppliers and hardware component parts from numerous sources none of which is believed by the Company to be a dominant supplier.

 

Trademarks, Licenses and Patents

 

Dotolo Research Corporation owns numerous patents, with it is primary patent on the Toxygen hardware, Patent # 5,788,650, “Colon Hydrotherapy Apparatus”- Ultra Violet Water Filtration System. This Patent is valid through 2018 and protects this product design both domestically and internationally.

 

Management believes that new patents will be granted on our new speculum and hardware products and in each instance, the patents will, when granted, be sufficient for us to pursue our proposed business.  The grant of a patent by the U.S. Patent Office does not insure that the patent will be upheld in litigation seeking to protect the patent or that the patent will not be found to infringe on patents held by others.

 

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Device Approval Process

 

It is anticipated that our new product(s) re-designs will be regulated as a Class II medical device and will be subject to extensive regulation by the FDA and other regulatory authorities in the US.  The Food, Drug, and Cosmetic Act (“FD&C Act”) and other federal and state statutes and regulations govern the research, design, development, preclinical and clinical testing, manufacturing, safety, approval or clearance, labeling, packaging, storage, record keeping, servicing, promotion, import and export, and distribution of medical devices.

 

Unless an exemption applies, each medical device we wish to commercially distribute in the U.S. will require either prior premarket notification, or 510(k) clearance, or premarket approval (PMA) from the FDA.  The FDA classifies medical devices into one of three classes.  Devices requiring fewer controls because they are deemed to pose lower risk are placed in Class I or II. Class I devices are subject to general controls such as labeling, premarket notification, and adherence to the FDA’s Quality System Regulation (a set of current good manufacturing practice requirements put forth by the FDA which govern the methods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation and servicing of finished devices) (“QSR”). Class IIdevices are subject to special controls such as performance standards, post-market surveillance, FDA guidelines, as well as general controls.  Some Class I and Class II devices are exempted by regulation from the premarket notification, or 510(k), clearance requirement or the requirement of compliance with certain provisions of the QSR. Devices are placed in Class III, which requires approval of a PMA application, if insufficient information exists to determine that the application of general controls or special controls are sufficient to provide reasonable assurance of safety and effectiveness, or they are life-sustaining, life-supporting or implantable devices, or the FDA deems these devices to be “not substantially equivalent” either to a previously 510(k) cleared device or to a “pre-amendment” Class III device in commercial distribution before May 28, 1976, for which PMA applications have not been required.  The FDA may classify our products as class III devices, requiring PMA approval.  A PMA application must be supported by valid scientific evidence, which typically requires extensive data, including technical, pre-clinical, clinical, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device. A PMA application must include, among other things, a complete description of the device and its components, a detailed description of the methods, facilities and controls used to manufacture the device, and proposed labeling. A PMA application also must be accompanied by a user fee, unless exempt. For example, the FDA does not require the submission of a user fee for a small business’s first PMA. After a PMA application is submitted and found to be sufficiently complete, the FDA begins an in-depth review of the submitted information. During this review period, the FDA may request additional information, or clarification of information already provided. Also during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. In addition, the FDA generally will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with the QSR, which requires manufacturers to follow design, testing, control, documentation, and other quality assurance procedures.   

 

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Our current products are classified as a Class II device and we do not anticipate we will be required to first seek premarket approval for our products. The FDA will determine based upon the 510(k) submission and may agree if the risk is low enough, and safety and effectiveness can be assured with special controls in place, the PMA will not be required.

 

If a PMA is required, the FDA can delay, limit, or deny approval of a PMA application for many reasons, including:

 

• The product may not be safe or effective to the FDA’s satisfaction;

• The data from our pre-clinical studies and clinical trials may be insufficient to support approval;

• The manufacturing process or facilities we use may not meet applicable requirements; and

• Changes in FDA approval policies or adoption of new regulations may require additional data.

 

If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter, or approvable letter, which usually contains a number of conditions which must be met in order to secure final approval of the PMA. When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device for certain indications. If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The FDA may also determine that additional clinical trials are necessary, in which case the PMA approval may be delayed while the trials are conducted and the data acquired is submitted in an amendment to the PMA. Even with additional trials, the FDA may not approve the PMA application. The PMA process can be expensive, uncertain, and lengthy and a number of devices for which FDA approval has been sought by other companies have never been approved for marketing.

 

New PMA applications or PMA supplements may be required for modifications to the manufacturing process, labeling and device specifications, materials or design of a device that is approved through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA application, and may not require as extensive clinical data or the convening of an advisory panel. Clinical trials are almost always required to support a PMA application, and are sometimes required for a 510(k) clearance. These trials generally require submission of an application for an Investigational Device Exemption (“IDE”) to the FDA. If a trial is considered a “Non-Significant Risk” (“NSR”) study subject to abbreviated IDE regulations, a formal IDE submission is not required by the FDA.  An IDE application must be supported byappropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.  The IDE application must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a non-significant risk device and eligible for more abbreviated IDE requirements.  Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent form are approved by appropriate institutional review boards (“IRBs”) at the clinical trial sites. The FDA’s approval of an IDE allows clinical testing to go forward, but does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and effectiveness, even if the trial meets its intended success criteria.  All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. .  Required records and reports are subject to inspection by the FDA. The results of clinical testing may be unfavorable or, even if the intended safety and effectiveness success criteria are achieved, may not be considered sufficient for the FDA to grant approval or clearance of a product.

 

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Although we believe our clinical trials will provide favorable data to support our PMA application, upon evaluation the FDA may conclude differently. Delays in receipt of or failure to receive FDA approval, the withdrawal of previously received approvals, or failure to comply with existing or future regulatory requirements would have a material adverse effect on our business, financial condition, and results of operations. Even if granted, the approvals may include significant limitations on the intended use and indications for use for which our products may be marketed.

 

After a device is approved or cleared and placed in commercial distribution, numerous regulatory requirements apply. These include:

 

• establishing registration and device listing;

• implementing QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures;

• labeling regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;

• medical device reporting regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and

• corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act that may present a risk to health.

 

Also, the FDA may require us to conduct post market studies or order us to establish and maintain a system for tracking our products through the chain of distribution to the patient level.  The FDA enforces regulatory requirements by conducting periodic, unannounced inspections and market surveillance.

 

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Failure to comply with applicable regulatory requirements, including those applicable to the conduct of our clinical trials, can result in enforcement action by the FDA, which may lead to any of the following sanctions:

 

• Warning letters;

• Fines and civil penalties;

• Unanticipated expenditures;

• Delays in approving or refusal to approve our applications, including supplements;

• Withdrawal of FDA approval;

• Product recall or seizure;

• Interruption of production;

• Operating restrictions;

• Injunctions; and

• Criminal prosecution.

 

Our products are manufactured in compliance with current Good Manufacturing Practices (“GMP”) requirements set forth in the QSR. The QSR requires a quality system for the design, manufacture, packaging, labeling, storage, installation and servicing of marketed devices and includes extensive requirements with respect to quality management and organization, device design, equipment, purchase and handling of components, production and process controls, packaging and labeling controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA enforces the QSR through periodic unannounced inspections If the FDA believes that we are not in compliance with QSR, it can shut down the manufacturing operations, require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations, or assess civil and criminal penalties against us or our officers or other employees.  Any such action by the FDA would have a material adverse effect on our business.  We cannot assure you that we will be able to comply with all applicable FDA regulations.

 

Non-FDA Government Regulation

 

The advertising of our products will be subject to both FDA and Federal Trade Commission regulations. In addition, the sale and marketing of our products will be subject to a complex system of federal and state laws and regulations intended to deter, detect, and respond to fraud and abuse in the healthcare system.  These laws and regulations restrict and may prohibit pricing, discounting, commissions and other commercial practices that may be typical outside of the healthcare business. In particular, anti-kickback and self-referral laws and regulations will limit our flexibility in crafting promotional programs and other financial arrangements with medical professionals in connection with the sale of our products and related services, especially with respect to physicians seeking reimbursement through Medicare or Medicaid.  These federal laws include, by way of example, the following:

 

• the anti-kickback statute prohibits certain business practices and relationships that might affect the provision and cost of healthcare services reimbursable under Medicare, Medicaid and other federal healthcare programs, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs;

• the physician self-referral prohibition, commonly referred to as the Stark Law, which prohibits referrals by physicians of Medicare or Medicaid patients to providers of a broad range of designated healthcare services in which the physicians or their immediate family members have ownership interests or with which they have certain other financial arrangements;

 

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• the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program;

• the Civil False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs; and

• the Civil Monetary Penalties Law, which authorizes the US Department of Health and Human Services (“HHS”) to impose civil penalties administratively for fraudulent or abusive acts.

 

Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, money penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both.  These laws also impose an affirmative duty on those receiving Medicare or Medicaid funding to ensure that they do not employ or contract with persons excluded from the Medicare and other government programs.

 

Many states have adopted or are considering legislative proposals similar to the federal fraud and abuse laws, some of which extend beyond the Medicare and Medicaid programs to prohibit the payment or receipt of remuneration for the referral of patients and physician self-referrals regardless of whether the service was reimbursed by Medicare or Medicaid.  Many states have also adopted or are considering legislative proposals to increase patient protections, such as limiting the use and disclosure of patient-specific health information.  These state laws typically impose criminal and civil penalties similar to the federal laws.

 

In the ordinary course of their business, medical device manufacturers and suppliers have been and are subject regularly to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations.  Recent federal and state legislation has greatly increased funding for investigations and enforcement actions, which have increased dramatically over the past several years.  This trend is expected to continue. Private enforcement of healthcare fraud also has increased, due in large part to amendments to the Civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. These whistleblower suits by private persons, known as qui tam relaters, may be filed by almost anyone, including physicians and their employees and patients, our employees, and even competitors. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), in addition to its privacy provisions, created a series of new healthcare-related crimes.

 

Competition

 

The Company currently operates in a limited, but competitive in hydro-colonic irrigation, environment of which there are only four (4) companies that are approved by the FDA to manufacture a Class II medical device for colon-hydro therapy. The Company's major competitors are located in Phoenix, Arizona, Clearwater Florida, San Antonio, Texas, and in Canada. The Company is the industry leader in hardware quality and reliability. The Company must design and develop a broader range of speculum and disposable products to maintain and grow its current market share.

 

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In a sense, the Company competes with traditional methods of bowel preparation prior to colonoscopy procedures such as Sodium Bi-phosphate and Sodium Phosphate which have general medical acceptance. The Food and Drug Administration (FDA) issued a safety alert regarding Fleet enemas and other related products in 2008. This alert was due to reports of acute phosphate nephropathy which is an acute kidney injury occurring in some patients who had used oral sodium phosphate (OSP) products for bowel cleansing prior to medical procedures. This injury was seen in patients who did not present with risk factors for this condition. We believe that a hydro-colonic irrigation method of bowel preparation will be highly favored by consumers as it does not require a difficult 24 hour fasting period, risk of renal failure, and an often unpleasant day of preparation.

 

 Employees

 

As of March 15, 2013, the Company has eight (8) full time employees. The Company employs four (4) manufacturing employees, two (2) administrative employees, one (1) Certified Public Accountant (CPA), and the Chief Executive Officer (CEO). When large volume orders are received, the Company hires part-time, temporary workers for additional packaging and shipping support. 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 CEO, and Non-circumvent and Non-Disclosure agreements with key employees that require them to keep all of our proprietary information confidential.  We cannot assure that such protections will prove adequate should they be challenged in litigation.  

 

Facilities

 

The Company operates from a 5,200 square foot industrial building containing approximately 4,500 square feet of manufacturing space and 1,500 square feet of administration space. The Company’s manufacturing facility is located in Phoenix, Arizona and is considered adequate for its present operations.

 

Legal Proceedings

 

The Company is not party to any legal proceedings.

 

Inventory Management

 

The Company's ability to manage its inventories properly is an important factor in its operations. Inventory shortages can impede the Company's ability to meet orders on a timely basis. Conversely, excess inventories will result in increased inventory carrying costs that will lower gross margins. If the Company is unable to effectively manage its inventory, its business, results of operations and financial condition will be adversely affected. Dotolo Research Corporation currently operates its inventory management system on MAS-90 (SAGE), and inventory is First In- First Out (FIFO) and we operate a Just in Time (JIT) system. All raw materials are procured only after receipt of orders and we maintain fifteen (15) day inventory levels to support our top customers with disposable products with those customers that provide the company with Standing Purchase Orders.

 

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Suppliers and Service Providers

 

The Company's ability to competitively price its products depends on the cost of raw material components especially petroleum based products, packaging costs, cost of fuel for shipping charges, and its ability to maintain its’ fixed and variable overhead. The cost of materials is subject to annual price increases from our suppliers and the company will enter into long-term pricing contracts to hold pricing levels firm for one (1) year with future increases based upon the Producer Price Index (PPI).

 

Customers

 

The Company's financial success is directly related to the willingness of our customers to continue to purchase its products. The Company does not typically have long-term contracts with its customers however once in the medical market the Company hopes to execute standing re-supply orders with large out-patient clinics and hospital systems. Sales to the Company's customers are generally on an order-by-order basis and are subject to rights of cancellation and rescheduling by the customers. Failure to fill customers' orders in a timely manner could harm the Company's relationships with its customers. Furthermore, if any of the Company's major customers experiences a significant downturn in its business, then these customers may reduce or discontinue purchases from the Company, which could have an adverse effect on the Company's business, results of operations and financial condition.

 

The Company sells its products to our customers from its Published Price List and discounts pricing based on sales volumes. The company does not extend credit. Financial difficulties of a customer could cause the Company to stop doing business with that customer or reduce its business with that customer. The Company's inability to collect from its customers or a cessation or reduction of sales to certain customers because of financial concerns could have an adverse effect on the Company's business, results of operations and financial condition.

 

The target markets and targeted customers for our products include:

 

·Health and Wellness Spas
·Endoscopy Out-Patient Clinics
·Osteopathic Physicians
·Hospital Systems- Veterans Hospitals
·Skilled Nursing Homes
·Assisted Living Facilities
·Individuals with disabilities such as paraplegic, quadriplegic and obesity

 

Implementation of Growth Strategy.

 

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As part of its growth strategy into the health and wellness and medical markets, the Company will:

 

·Strengthen and expand distribution channels in key MSA markets for both health and wellness and medical markets within the United States
·Strengthen international distribution and re-seller agreements specifically in the United Kingdom, Saudi Arabia (Middle East), Africa, Mexico, Taiwan and Australia.
·Release new product development on Version 2 of the Toxygen hardware system and release new speculum disposable products.
·Establish contracts with Group Purchasing Organizations (GPO) such as Tenet, Premier, HCA, and the Veterans Administration (GSA).
·Establish distribution agreements with sterile kit packing manufacturers such as Baxter Healthcare, Owens & Minor, and DeRoyal Industries.
·Expand its factory operations to be able to accept large orders that will involve larger production runs that management believes will be more profitable.

 

These initiatives are largely conditioned upon the Company obtaining additional capital, of which there can be no assurance. Any such failures could have an adverse effect on the Company's business, results of operations and financial condition.

 

Government Regulation

 

The Company's business is affected by changes in government and regulatory policies specifically in the United States, the United Kingdom, Australia and Canada.  

 

Integration of Newly Acquired Businesses.

 

The Company may make strategic acquisitions in the future and cannot assure that it will be able to successfully integrate the operations of newly-acquired businesses into the Company's current operations. It is Management intent to consolidate various business functions to include Information Technology, Accounting, legal under a central core operation. The failure to integrate newly acquired businesses or the inability to make suitable strategic acquisitions in the future could have an adverse effect on the Company's business, results of operations and financial condition.

 

Attraction and Retention of Qualified Personnel

 

The Company is dependent on the efforts and abilities of its senior executive officers. While the Company believes that its senior 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.

 

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.

 

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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.

 

ITEM 3.02 – Unregistered Sale of Equity Securities

 

The names, addresses and percentage ownership of Clearview Medical, LLC receiving the Series D Preferred Shares in the Company are as follows:

       
   Number of  Percentage of
Name and Address  Shares  Class
          
Clearview Medical, LLC(1)   58,564    100%
212 Edgewood Drive
Pineville, Louisiana 71360
         
          
Roy W. Erwin (1)   58,564    100%
212 Edgewood Drive
Pineville, Louisiana 71360
         
          
(1)   Clearview Medical, LLC is 100% owned by Roy W. Erwin, who is deemed to be the beneficial owner of these shares.

 

 

These shares were issued in reliance on the exemption afforded by section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering. The share certificates will bear an appropriate restrictive legend and stop transfer instructions will be maintained with the Company’s transfer agent.

 

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ITEM 5.02 – Departure of a Director or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Pursuant to the Agreement, Barry Griffith is resigning his position as Chief Executive Officer but is remaining on our Board of Directors. There are no other departures of the current officers of directors.

 

Pursuant to the Agreement, Clearview Medical, LLC will appoint one member to the Board of Directors and have the right to appoint one additional Member at its discretion. Roy W. Erwin has been elected as Chairman of the Board and Chief Executive Officer of the Company.

 

Roy Wayne Erwin- 54, is the sole shareholder of Clearview Medical, LLC and is the current CEO of Dotolo Research Corporation where he has worked since 2011. Since 2010, R. Wayne Erwin has been the Chief Executive Officer of Deep South Capital, LLC and Chief Executive Officer of Clearview Medical LLC, the parent of Dotolo Research Corporation located in Phoenix, AZ. Dotolo Research provides state-of-the art hardware and med-surgical disposable products for advanced bowel-preparation prior to gastro-intestinal, colonoscopy and OB/GYN medical procedures. From 2007 to 2010, Mr. Erwin was the co-founder and Chief Operations Officer of Electronic Health Network, a leader in Healthcare 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 $ 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 management capacities. He served in the US Army, 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 – 43, 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. 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, where he was responsible for the accounting and payroll functions for two inbound call centers. In addition, Mr. Kramarz was responsible for quarterly consolidations into the parent company. From 1992 to 1995, Mr. Kramarz was a staff accountant at VandenToorn & Associates CPA firm where his 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 - 44 has 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.

 

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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)Certificate of Designation of Preferred Stock

 

To be filed by amendment.

 

 (d)Exhibits

 

   

Exhibit 10.1 - Stock Purchase Agreement

Exhibit 10.2 - Employment Agreement

 

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: March 27, 2013

 

 
  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
   

 

 

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EX-10.1 2 oncologix8k3222013exh101.htm STOCK PURCHASE AGREEMENT

Exhibit 10.1

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of March 22, 2013 by and among Clearview Medical, LLC, a Louisiana limited liability company, (“CM” or “Seller”) with a principal place of business at 212 Edgewood Drive, Pineville, Louisiana 71360, Oncologix Tech, Inc.(“OCLG”) a Nevada corporation, with a principal place of business in Grand Rapids, MI, 49518 and a mailing address of PO Box 8832, Grand Rapids, MI 49518-8832 and Dotolo Research Corporation, a Florida corporation (“DRC” or the “Company”) with an address of 3731 East LaSalle, Phoenix, AZ 85040.

 

W I T N E S S E T H:

WHEREAS, the Seller is the owner of 1,000 shares of common stock, par value $.01 per share, of DRC (the “Shares”) representing all the issued and outstanding shares of DRC; and

 

WHEREAS, Seller desires to sell, and OCLG desires to purchase, the Shares on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual representations, warranties, agreements and indemnities herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the parties agree as follows:

1.             Purchased Shares

Subject to the terms and conditions herein stated, CM hereby agrees to sell, assign, transfer and deliver to OCLG on the Closing Date, and OCLG hereby agrees to purchase the Shares from Seller on the Closing Date, in exchange for 58,564 shares of a newly created series of preferred stock (“New Preferred” and the shares of New Preferred to be issued to CM are hereinafter referred to as “New Preferred Shares”) having the rights preferences and limitations to be set forth in the a certificate of designation attached hereto as Exhibit 1. The New Preferred Shares shall be issued as soon as possible after the Closing Date, but no later than thirty (30) days after the closing date.

2.             Seller Employment. At the Closing, OCLG shall execute an employment agreement with R. Wayne Erwin in the form attached as Exhibit 2 to this agreement.

3.             Closing Date

The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place on March 22, 2013 (the “Closing Date”), at the offices of Seller in Pineville, Louisiana.

 

 
 

 

4.             Representations and Warranties

4.1             By Seller and DRC. Seller and DRC, jointly and severally, represent and warrant as follows and acknowledge that OCLG is relying upon such representations and warranties in connection with the purchase by OCLG of the Shares:

 (a)DRC is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida and in each jurisdiction where its business or its ownership of property requires such qualification except where such failure to qualify would not have a material adverse effect on the business or property of DRC;
(b)The authorized capital stock of DRC consists of 1,000 shares of common stock and 0 shares of preferred stock; and of such authorized capital, only 1,000 shares of common stock have been duly issued and are outstanding, all of which are fully paid and non-assessable;
(c)No person, corporation or other entity has any agreement, option or warrant, or any right or privilege (whether by law, pre-emptive or contractual, or whether by means of any exercise, conversion or other right or action) which has the effect of or is capable of becoming an agreement, option or warrant, for the purchase from DRC of any securities (including convertible securities) of DRC;
(d)The Shares are owned by Seller and DRC as the respective registered and beneficial owner of record, with good and marketable title thereto, free and clear of all mortgages, liens, charges, security interests, adverse claims, pledges, encumbrances, restrictions and demands whatsoever (other than investment restrictions imposed by federal or state securities laws);
(e)No person, corporation or other entity has any agreement, option or warrant, or any right or privilege (whether by law, pre-emptive or contractual, or whether by means of any exercise, conversion or other right or action) to acquire any shares of DRC;
(f)Neither Seller nor DRC is party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, instrument, charter or by-law provision, statute, regulation, order, judgment, decree or law which would be violated, contravened or breached by, or under which any default would occur as a result of, or which would prevent or materially restrict the consummation of the transactions provided for herein;
(g)Seller and DRC have all requisite power and authority to execute, deliver and perform their obligations under this Agreement; the execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary action on the part of Seller and DRC; and this Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against them in accordance with its terms;

 

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(h)None of the reports, notices, statements and other filings made by DRC to federal and state authorities and as set forth in DRC’s financial statements as of August 31, 2012, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not misleading. Nothing has occurred since August 31, 2012 with respect to which the Company would be required to file or make any revisions to these Filings. The balance sheets, statements of income, statements of cash flows, and stockholders’ equity have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits); and without limitation of the foregoing, DRC has no material liabilities, fixed or contingent, known or unknown, except to the extent reflected in such financial statements or thereafter incurred in the ordinary course of business.
(i)Within 75 days of the Closing Date, the financial statements required by Item 9.01 of Form 8-K shall be filed with the SEC. These financial statements shall be prepared pursuant to Regulation S-X and include a manually signed accountant’s report pursuant to Rule 2-02 of Regulation S-X.
(j)Since August 31, 2012, (i) the business of DRC has been operated in the ordinary course, (ii) there has been no material adverse change in the financial condition, operations or business of DRC from that reflected in the aforesaid financial statements, and DRC has not incurred any material obligation or liability except in the ordinary course of business, and, except as set forth on Exhibit 4.1(j) hereof, (iii) there has not been any (A) declaration, setting aside the payment of any dividend or other distribution with respect to the capital stock of DRC, (B) direct or indirect redemption, purchase or other acquisition by DRC of any of its capital stock, or (C) increase in the rate of salary or compensation paid or payable by DRC to Seller or any other officer, director or employee of DRC;
(k)DRC is not in material default of any of its obligations (including, but not limited to, all leases to which DRC is a party or by which DRC is bound, whether for realty or personalty);
(l)DRC has, to the date hereof, filed all federal, state and local tax returns and paid or made adequate reserve on its books for all taxes, assessments and other impositions as and to the extent required by law;
(m)DRC is in compliance in all material respects with all laws, statutes, regulations, rules and ordinances applicable to the conduct of its business, and has in full force and effect all licenses, permits and other authorizations required for the conduct of its business as presently constituted;

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(n)Intentionally left blank.
(o)DRC maintains, has in full force and effect, and has paid all premiums in respect of insurance covering its business and assets against such hazards and in such amounts as are normal and customary for similar businesses of similar size in the locality;
(p)DRC is not a party to or bound by any collective bargaining agreement, employment agreement, consulting agreement or other commitment for the employment or retention of any person;
(q)DRC does not maintain and is not required to make any contributions to any pension, profit-sharing, retirement, deferred compensation or other such plan or arrangement for the benefit of any employee, former employee or other person;
(r)There is no pending or, to Seller’ knowledge, threatened litigation, arbitration, administrative proceeding or other legal action or proceeding against or relating to DRC’s business, nor is there any basis therefore except as set forth in 4.1(r);
(s)DRC has the valid right to utilize all trade names, trademarks, patents, trade secrets and other intellectual property utilized in its business, all of which is detailed in Exhibit 4.1 (s), and has not received notice of any claimed infringement of any such intellectual property with the rights or property of any other person;
(t)Neither Seller nor DRC have any knowledge of any fact, event, circumstance or condition that would materially impair DRC’s ability to continue its normal operations as heretofore conducted (other than general, industry-wide conditions); and
(u)Annexed hereto as Exhibit 4.1(u) are true, complete and correct copies of the Articles of Incorporation and By Laws of DRC as same are in effect now and which, Seller and DRC hereby covenant, will be in effect at the Closing without any further amendments (unless agreed to in advance in writing by OCLG).
(v)Brokers or Finders. Neither the Seller nor DRC has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or financial advisory services nor other similar payment in connection with this Agreement or the transactions contemplated hereby or thereby.

 

(w)Disclosure. No representation or warranty by the Seller contained in this Agreement or any other Transaction Documents to which the Seller is a party, nor any written statement or certificate furnished by the Seller to the OCLG or its representatives in connection herewith or therewith or pursuant hereto or thereto contains any untrue statement of a material fact, or omits to state any material fact required to make the statements contained herein or therein not misleading.

 

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(x)Books and Records. The books of account and other records of the Company, all of which have been made available to OCLG, are true and correct. The Seller have provided OCLG with all written records of all meetings held by, and corporate or limited liability DRC action taken by, the shareholders, the board of directors, committees of the board of directors or the manager(s) and/or members of the Company. The stock books or equivalent records of the Seller and DRC are true, complete and correct. As of the date hereof, all of such books and records are in the possession of the Seller and the Company. True, complete and correct copies of the minute books, stock books or equivalent records of DRC have been provided to OCLG
   
 (y)Financial Statements; Undisclosed Liabilities.
   
  Within 75 days of the Closing Date, the financial statements required by Item 9.01 of Form 8-K shall be filed with the SEC. These financial statements shall be prepared pursuant to Regulation S-X and include a manually signed accountant’s report pursuant to Rule 2-02 of Regulation S-X. The Financial Statements were prepared in accordance with GAAP during the period covered thereby, are in accordance with the books and records of DRC and fairly and accurately present the financial position of DRC on the date of such statements and the results of the operations of DRC for the period covered thereby. DRC does not have any known liabilities (absolute, accrued, contingent or otherwise), except liabilities (i) reflected in the Financial Statements, (ii) incurred since the date of the Financial Statements, in the ordinary course of business consistent with past practice, which are of the same general nature and amount as those set forth on the face of the Financial Statements, other than any liabilities resulting from, arising out of, relating to, in the nature of, or caused by any breach of contract, breach of warranty, tort, infringement or violation of law, in each case as otherwise disclosed herein, or incurred in connection with this Agreement.

 

(z)           Accounts Receivable. All accounts receivable of DRC that are reflected on the Financial Statements or on the accounts receivable ledger of the DRC as of the date hereof (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made in the ordinary course of business.

 

(aa)           Title to Properties; Encumbrances. DRC has good and merchantable title to all of the assets which they purport to own, whether reflected on the Financial Statements or acquired subsequent to March 22, 2013, free and clear of all encumbrances and (ii) the DRC has the right to use all properties and assets used by it which it does not purport to own, free and clear of all encumbrances. All real property, machinery, equipment, fixtures, vehicles and other properties, tangible or intangible, which are owned, leased, licensed or used by the DRC are in good operating condition and repair, ordinary wear and tear accepted.

 

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(bb)           Condition and Sufficiency of Assets. The assets owned or used by the DRC, including, without limitation, all inventories, are adequate for the uses to which they are being put and sufficient for the continued conduct of its business after the date hereof in substantially the same manner as conducted prior to the date hereof.

 

(cc)           Absence of Certain Changes and Events. Since August 31, 2012, there has been (i) no material adverse change in the condition (financial or otherwise) of DRC or in the business, operations, financial condition, assets, liabilities, prospects or contractual rights of the Company, (ii) no declaration, setting aside or payment of any dividend or other distribution with respect to, or any direct or indirect redemption or acquisition of, any of the capital stock of the DRC(iii) no material waiver of any valuable right of the DRC or cancellation of any debt or claim held by the Company, (iv) no loan by DRC to any officer, director, employee or shareholder of the Company, or any agreement or commitment therefor, (v) other than in the ordinary course of business, no material increase, direct or indirect, in the compensation paid or payable to any officer, director, employee or agent of the Company, (vi) no material loss, destruction or damage to any property of the DRC whether or not insured, (vii) no material change in the personnel of the DRC or the terms and conditions of their employment, (viii) no acquisition or disposition of any assets (or any contract or arrangement therefor), nor any other transaction by the DRC otherwise than for fair value in the ordinary course of business consistent with past practice, (ix) no material change in election, annual accounting period or accounting period, no amendment to any tax return, no settlement of any tax claim or assessment, no surrender of any right to claim a refund, no consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment and (x) no contract, agreement, commitment, expenditure or hiring of new employees or consultants involving a potential commitment in excess of $5,000 or which is otherwise material and not entered into in the ordinary course of business consistent with past practice.

 

(dd)           Contracts

 

(i)           Exhibit 4.1(dd) contains a list of all contracts which: (i) involve the Company; (ii) involve monetary commitments by any party in excess of $5,000 and (iii) cannot be canceled without penalty on thirty (30) days notice or less. Seller has provided true and correct copies of all such contracts to OCLG, or, if applicable, summaries of any oral contracts.

 

(ii)           All the contracts listed in Exhibit 4.1(dd) are valid and binding obligations of Seller or the Company, and, to Seller’s knowledge, of the other party or parties thereto, enforceable against Seller or the Company, and, to Seller’s knowledge, of the other party or parties thereto, except as enforcement thereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights in general, or by general principles of equity.

 

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(iii)           There has been no uncured material breach or default in any provision of any of such contracts listed in Exhibit 4.1(dd) by the Seller or the DRC or, to the Seller’s knowledge, any other party or parties thereto, and nothing has occurred which the lapse of time or giving of notice or both would constitute an uncured material breach or default by the Seller or the DRC or, to the Seller’s knowledge, any other party or parties thereto.

 

(ee)           Insurance. Exhibit 4.1(ee) lists all the insurance policies of the Company, which policies are now in full force and effect in accordance with their terms and expire on the dates shown on Exhibit 4.1(ee). There has been no default in the payment of premiums on any of such policies and, to the Seller’ knowledge, there is no ground for cancellation or avoidance of any such policies or any increase in the premiums thereof, or for reduction of the coverage provided thereby. True, correct and complete copies of all insurance policies listed in Exhibit 4.1(ee) will be furnished to the Buyer.

(ff)           Environmental Matters. No event has occurred or condition exists or operating practice is being employed that under current law DRC is aware of that could give rise to liability on the part of the Company, either at the present time or in the future, for any losses, liabilities, damages (whether consequential or otherwise), settlements, penalties, interest and expenses (including any such liability on account of the right of any governmental or private entity or person, and including closure expenses, costs of assessment, containment, or removal), arising under any presently enacted federal, state, or local statute, or any regulation that has been promulgated pursuant thereto, or common law, as a result of or in connection with, or alleged to be as a result of or in connection with, the presence, handling, storage, use, transportation, disposal, treatment, discharge and/or release of any Substances in or near or from facilities used by the Company. As used in this Section (ff) the term “Substances” shall mean any pollutant, hazardous substance, hazardous material, hazardous waste or toxic waste, as defined in any presently enacted federal, state or local statute or any regulation that has been promulgated pursuant thereto.

 

(gg)           Employee Benefits. Except as set forth on Exhibit 4.1(gg), DRC does not, directly or through any trade or business which together with Seller would be treated as a “single employer” within the meaning of Code Section 414(b), (c), (m) or (o) (“Controlled Group Member”), maintain or contribute (or have an obligation to contribute) to (i) any “employee benefit plan” (as defined in Section 3(3) of ERISA, whether a single employer, a multiple employer or a multiemployer plan, for the benefit of employees or former employees, or (ii) any other plan, policy, program, practice or arrangement providing compensation or benefits under which Seller or a Controlled Group Member has any obligation or liability to any employee or former employee (or any dependent or other beneficiary thereof) including, without limitation, incentive, bonus, deferred compensation, vacation, holiday, medical, severance, disability, death, stock purchase or other similar benefit, whether written or unwritten (individually, an “Employee Benefit Plan” and collectively, the “Employee Benefit Plans”). True and complete copies of all written Employee Benefit Plans have been delivered to OCLG.

 

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(ii)            Each Employee Benefit Plan maintained by DRC or any Controlled Group Member (and each related trust, custodial account or insurance contract) complies in form and in operation with all applicable governmental requirements, including ERISA and the Code, except where failure to comply would not have a material adverse effect, and all contributions due under each such plan have been or will be made by the date such contribution is or was required to be made under the terms of the Plan or applicable law.

 

(iii)           No charge, complaint, action, claim or demand with respect to the administration or investment of the assets of any Employee Benefit Plan of DRC or any Controlled Group Member (other than routine claims for benefits) is pending or, to Seller’ knowledge, threatened, and to the knowledge of Seller, no facts exist that could form the basis for any such charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand.

 

(iv)           DRC and its Controlled Group Members (A) have never contributed to, or been under any obligation to contribute to, any multiemployer plan (as defined in Section 3(37) of ERISA) and (B) are not liable, directly or indirectly, with respect to any such plan for a complete or partial withdrawal (within the meaning of Title IV of ERISA) or due to the termination or reorganization of such a plan. Seller and its Controlled Group Members have never maintained or contributed, or had an obligation to contribute, to a defined benefit plan subject to Title IV of ERISA.

 

(hh)           Suppliers; Customers.

 

Exhibit 4.1(hh) sets forth for the twelve months ended August 31, 2012, (i) the names of the ten largest suppliers of DRC based on the aggregate value of merchandise ordered by the DRC from such suppliers during such period and (ii) the amount for which each such supplier invoiced the DRC during such period. No such supplier has ceased doing business with the Company. To Seller’ knowledge all such suppliers will sell merchandise to DRC after Closing. Exhibit 4.1(hh) sets forth (i) a true, complete and correct listing of the ten largest customers of DRC based upon the amount for which each such customer was invoiced during the twelve months ended August 31, 2012, and (ii) a listing of such amounts. No such customer of the DRC has ceased doing business with DRC. To Seller’ knowledge, all such customers will continue doing business with the DRC after Closing.

 

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(ii)           Inventories.

 

All inventories of DRC are of good, usable and merchantable quality and do not include obsolete or discontinued items. There are adequate reserves to cover any potential obsolete inventory. All such inventories are of such quality as to meet the quality control standards of DRC and any applicable governmental quality control standards, all such finished goods are saleable as current inventories at the current prices of DRC in the ordinary course of business, all such inventories are recorded on the books at the lower of cost or market value determined in accordance with GAAP.

 

(jj)           Product Warranties; Customer Disputes. The Seller has provided OCLG with a copy of the Company’s standard terms of sale. Since January 1, 2013 there have been no changes to DRC’s standard product warranties or any claims or complaints for defective products outside the normal course of business.

4.2           By OCLG. OCLG represents and warrants to Seller and DRC as follows and acknowledges that Seller and DRC are relying upon such representations and warranties in connection with the sale by Seller of the Shares:

(a)OCLG is a company validly existing and in good standing under the laws of the State of Nevada and in each jurisdiction where its business or its ownership of property requires such qualification except where such failure to qualify would not have a material adverse effect on the business or property of OCLG;
(b)OCLG has all requisite power and authority to execute, deliver and perform its obligations under this Agreement; the execution, delivery and performance of this Agreement by OCLG has been duly authorized by all necessary action on the part of OCLG; and this Agreement constitutes the legal, valid and binding obligation of OCLG, enforceable against OCLG in accordance with its terms, except as enforceability may be limited by applicable bankruptcy or insolvency statutes or by a court acting as a court of equity;
(c)OCLG is not a party to, bound or affected by or subject to any indenture, mortgage, lease, agreement, instrument or charter provision, statute, regulation, order, judgment, decree or law which would be violated, contravened or breached by, or under which any default would occur as a result of, the consummation of the transactions provided for herein; and
(d)OCLG is purchasing the Shares for its own account for investment purposes.
(e)As of March 22, 2013, the authorized capital stock of OCLG consists of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock; and of such authorized capital, only 61,587,422 shares of common stock and 129,162 shares of Series A Preferred Stock all of which have been duly issued and are validly outstanding fully paid and non-assessable;

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(f)No person, corporation or other entity has any agreement, option or warrant, or any right or privilege (whether by law, pre-emptive or contractual, or whether by means of any exercise, conversion or other right or action) which has the effect of or is capable of becoming an agreement, option or warrant, for the purchase from OCLG of any securities (including convertible securities) of OCLG which has not been disclosed in the footnotes to the financial statements included in OCLG’s Form 10-Q for the period ending November 30, 2012 (the “10-Q”);
(g)The New Preferred Shares will, upon issuance, be duly issued and outstanding fully paid and non-assessable shares of New Preferred;
(h)Except as disclosed in the 10-Q, no person, corporation or other entity has any agreement, option or warrant, or any right or privilege (whether by law, pre-emptive or contractual, or whether by means of any exercise, conversion or other right or action) which with the giving of notice or lapse of time could become an agreement, option or warrant, for the purchase of any of the Shares;
(i)None of the reports, notices, statements and other filings made by OCLG to federal and state authorities and as set forth in OCLG’S financial statements as of November 30, 2012, as included in the 10-Q or the financial statements included OCLG’s Annual Report on Form 10-K for the year ended August 31, 2012 (the 10-K), contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not misleading. Nothing has occurred since November 30, 2012 with respect to which the Company would be required to file or make any revisions to the 10-Q. The balance sheets and statements of income, changes in financial position and stockholders’ equity contained in any of the 10-Q and 10-K have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits); and without limitation of the foregoing, OCLG has no material liabilities, fixed or contingent, known or unknown, except to the extent reflected in such financial statements or thereafter incurred in the ordinary course of business.
(j)Since November 30, 2012, (i) the business of OCLG has been operated in the ordinary course, (ii) there has been no material adverse change in the financial condition, operations or business of OCLG from that reflected in the aforesaid financial statements, and OCLG has not incurred any material obligation or liability except in the ordinary course of business, and, except as set forth on Exhibit 4.2(j) hereof, (iii) there has not been any (A) declaration, setting aside the payment of any dividend or other distribution with respect to the capital stock of OCLG, (B) direct or indirect redemption, purchase or other acquisition by OCLG of any of its capital stock, or (C) increase in the rate of salary or compensation paid or payable by OCLG to Seller or any other officer, director or employee of OCLG;

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(k)OCLG is not in material default of any of its obligations (including, but not limited to, all leases to which OCLG is a party or by which OCLG is bound, whether for realty or personalty);
(l)OCLG has, to the date hereof, filed all federal, state and local tax returns and paid or made adequate reserve on its books for all taxes, assessments and other impositions as and to the extent required by law;
(m)OCLG is in compliance in all material respects with all laws, statutes, regulations, rules and ordinances applicable to the conduct of its business, and has in full force and effect all licenses, permits and other authorizations required for the conduct of its business as presently constituted;
(n)OCLG maintains, has in full force and effect, and has paid all premiums in respect of insurance covering its business and assets against such hazards and in such amounts as are normal and customary for similar businesses of similar size in the locality;
(o)OCLG is not a party to or bound by any collective bargaining agreement, employment agreement, consulting agreement or other commitment for the employment or retention of any with the exception of an Employment Agreement with the OCLG Chief Financial Officer as defined in Exhibit 4.2(o).
(p)OCLG does not maintain and is not required to make any contributions to any pension, profit-sharing, retirement, deferred compensation or other such plan or arrangement for the benefit of any employee, former employee or other person
(q)There is no pending or, to OCLG’S knowledge, threatened litigation, arbitration, administrative proceeding or other legal action or proceeding against or relating to OCLG or its business;
(r)OCLG has the valid right to utilize all trade names, trademarks, patents, trade secrets and other intellectual property utilized in its business, all of which is detailed in the 10-Q, and has not received notice of any claimed infringement of any such intellectual property with the rights or property of any other person;

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(t)OCLG has no knowledge of any fact, event, circumstance or condition that would materially impair OCLG’S ability to continue its normal operations as heretofore conducted (other than general, industry-wide conditions);
(u)Annexed hereto as Exhibit 4.2(u) are true, complete and correct copies of the Articles of Incorporation and By Laws of OCLG as same are in effect now and which, Seller and OCLG hereby covenant, will be in effect at the Closing without any further amendments (unless agreed to in advance in writing by OCLG).
(v)Brokers or Finders. OCLG has not incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or financial advisory services or other similar payment in connection with this Agreement or the transactions contemplated hereby or thereby.

 

(w)Disclosure. No representation or warranty by the OCLG contained in this Agreement or any other Transaction Documents to which the OCLG is a party, nor any written statement or certificate furnished by the OCLG to the Seller or its representatives in connection herewith or therewith or pursuant hereto or thereto contains any untrue statement of a material fact, or omits to state any material fact required to make the statements contained herein or therein not misleading.

 

(x)Books and Records. The books of account and other records of OCLG, all of which have been made available to Seller are true and correct. OCLG has provided Seller with all written records of all meetings held by and corporate or limited liability OCLG action taken by, the shareholders, the board of directors, committees of the board of directors or the manager(s) and/or members of the Company. The stock books or equivalent records of OCLG are true, complete and correct. As of the date hereof, all of such books and records are in the possession of the Seller. True, complete and correct copies of the minute books, stock books or equivalent records of OCLG have been provided to Seller;

 

 

(y)           Title to Properties; Encumbrances. OCLG has good and merchantable title to all of the assets which they purport to own, whether reflected in the 10-Q or acquired subsequent to November 30, 2012, free and clear of all encumbrances and (ii) OCLG has the right to use all properties and assets used by it which it does not purport to own, free and clear of all encumbrances. All real property, machinery, equipment, fixtures, vehicles and other properties, tangible or intangible, which are owned, leased, licensed or used by OCLG are in good operating condition and repair, ordinary wear and tear.

 

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(z)           Condition and Sufficiency of Assets. The assets owned or used by the OCLG, including, without limitation, all inventories, are adequate for the uses to which they are being put and sufficient for the continued conduct of its business after the date hereof in substantially the same manner as conducted prior to the date hereof.

 

(aa)           Absence of Certain Changes and Events. Since November 30, 2012, there has been (i) no material adverse change in the condition (financial or otherwise) of OCLG or in the business, operations, financial condition, assets, liabilities, prospects or contractual rights of OCLG, (ii) no declaration, setting aside or payment of any dividend or other distribution with respect to, or any direct or indirect redemption or acquisition of, any of the capital stock of the OCLG (except for the dividends in the purview of Section 8 hereof), (iii) no material waiver of any valuable right of the OCLG or cancellation of any debt or claim held by the Company, (iv) no loan by OCLG to any officer, director, employee or shareholder of the Company, or any agreement or commitment therefor, (v) other than in the ordinary course of business, no material increase, direct or indirect, in the compensation paid or payable to any officer, director, employee or agent of the Company, (vi) no material loss, destruction or damage to any property of the OCLG whether or not insured, (vii) no material change in the personnel of the OCLG or the terms and conditions of their employment, (viii) no acquisition or disposition of any assets (or any contract or arrangement therefor), nor any other transaction by the OCLG otherwise than for fair value in the ordinary course of business consistent with past practice, (ix) no material change in election, annual accounting period or accounting period, no amendment to any tax return, no settlement of any tax claim or assessment, no surrender of any right to claim a refund, no consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment and (x) no contract, agreement, commitment, expenditure or hiring of new employees or consultants involving a potential commitment in excess of $5,000 or which is otherwise material and not entered into in the ordinary course of business consistent with past practice.

 

(bb)           Contracts

Exhibit 4.2(bb) contains a list of all contracts which: (i) involve the Company; (ii) involve monetary commitments by any party in excess of $5,000 and (iii) cannot be canceled without penalty on thirty (30) days notice or less. OCLG has provided true and correct copies of all such contracts to Seller, or, if applicable, summaries of any oral contracts.

 

(ii)           All the contracts listed in Exhibit 4.2(bb) are valid and binding obligations of OCLG, and, to OCLG’s knowledge, of the other party or parties thereto, enforceable against OCLG, and, to OCLG’s knowledge, of the other party or parties thereto, except as enforcement thereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights in general, or by general principles of equity.

  

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(iii)           There has been no uncured material breach or default in any provision of any of such contracts listed in Exhibit 4.2(bb) by OCLG or, to OCLG’s knowledge, any other party or parties thereto, and nothing has occurred which the lapse of time or giving of notice or both would constitute an uncured material breach or default by OCLG or, to OCLG’s knowledge, any other party or parties thereto.

 

(cc)           Insurance. Exhibit 4.2(cc) lists all the insurance policies of OCLG, which policies are now in full force and effect in accordance with their terms and expire on the dates shown on Exhibit 4.2(cc), together with such information for the period from December 1, 2012 to the present with respect to any claims thereunder. There has been no default in the payment of premiums on any of such policies and, to OGLC’s knowledge, there is no ground for cancellation or avoidance of any such policies or any increase in the premiums thereof, or for reduction of the coverage provided thereby. True, correct and complete copies of all insurance policies listed in Exhibit 4.2 (cc) will be furnished to the Seller.

(dd)           Environmental Matters. No event has occurred or condition exists or operating practice is being employed that under current law OCLG is aware of that could give rise to liability on the part of OCLG, either at the present time or in the future, for any losses, liabilities, damages (whether consequential or otherwise), settlements, penalties, interest and expenses (including any such liability on account of the right of any governmental or private entity or person, and including closure expenses, costs of assessment, containment, or removal), arising under any presently enacted federal, state, or local statute, or any regulation that has been promulgated pursuant thereto, or common law, as a result of or in connection with, or alleged to be as a result of or in connection with, the presence, handling, storage, use, transportation, disposal, treatment, discharge and/or release of any Substances in or near or from facilities used by the Company. As used in this Section (dd) the term “Substances” shall mean any pollutant, hazardous substance, hazardous material, hazardous waste or toxic waste, as defined in any presently enacted federal, state or local statute or any regulation that has been promulgated pursuant thereto.

 

(ee) Employee Benefits.

(i)           OCLG does not, directly or through any trade or business which together with Seller would be treated as a “single employer” within the meaning of Code Section 414(b), (c), (m) or (o) (“Controlled Group Member”), maintain or contribute (or have an obligation to contribute) to (i) any “employee benefit plan” (as defined in Section 3(3) of ERISA, whether a single employer, a multiple employer or a multiemployer plan, for the benefit of employees or former employees, or (ii) any other plan, policy, program, practice or arrangement providing compensation or benefits under which Seller or a Controlled Group Member has any obligation or liability to any employee or former employee (or any dependent or other beneficiary thereof) including, without limitation, incentive, bonus, deferred compensation, vacation, holiday, medical, severance, disability, death, stock purchase or other similar benefit, whether written or unwritten (individually, an “Employee Benefit Plan” and collectively, the “Employee Benefit Plans”). True and complete copies of all written Employee Benefit Plans have been delivered to Seller.

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(ii)           Each Employee Benefit Plan maintained by OCLG or any Controlled Group Member (and each related trust, custodial account or insurance contract) complies in form and in operation with all applicable governmental requirements, including ERISA and the Code, except where failure to comply would not have a material adverse effect, and all contributions due under each such plan have been or will be made by the date such contribution is or was required to be made under the terms of the Plan or applicable law.

(iii)           No charge, complaint, action, claim or demand with respect to the administration or investment of the assets of any Employee Benefit Plan of OCLG or any Controlled Group Member (other than routine claims for benefits) is pending or, to Seller’ knowledge, threatened, and to the knowledge of Seller, no facts exist that could form the basis for any such charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand.

(iv)           OCLG and its Controlled Group Members (A) have never contributed to, or been under any obligation to contribute to, any multiemployer plan (as defined in Section 3(37) of ERISA) and (B) are not liable, directly or indirectly, with respect to any such plan for a complete or partial withdrawal (within the meaning of Title IV of ERISA) or due to the termination or reorganization of such a plan. Seller and its Controlled Group Members have never maintained or contributed, or had an obligation to contribute, to a defined benefit plan subject to Title IV of ERISA.

 

(ff)           Suppliers; Customers.

 

For the twelve months ended August 31, 2012, OCLG has had no suppliers or customers.

 

(gg)           Inventories.

 

OCLG maintains no inventories.

 

(hh)Product Warranties; Customer Disputes. The OCLG has provided Seller with a copy of the Company’s standard terms of sale. Since August 31, 2012 there have been no changes to OCLG’s standard product warranties or any claims or complaints for defective products.
(ii)OCLG is not and has never been a “Shell company” as that term is defined in Rule 405 under the Securities Act of 1933, as amended and any published interpretations of such term by the Securities and Exchange Commission (“SEC”).
(jj)The periodic and current reports filed with the SEC by OCLG pursuant to the SEC under the Securities Exchange Act of 1934, as amended, were true accurate and complete when filed and do not fail to state any fact necessary in order to make the statements therein not misleading.

 

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5.           Survival of Representations and Warranties

5.1           Seller. The representations and warranties of Seller contained in this Agreement, or any agreement, certificate or other document delivered or given pursuant to this Agreement, shall survive the consummation of the transactions contemplated by this Agreement and, notwithstanding such completion or any investigation made by or on behalf of OCLG, shall continue in full force and effect for the benefit of OCLG and any claim in respect thereof shall be made in writing:

(a)with respect to representations and warranties of Seller, relating to matters other than tax matters, for a period of 18 months after the Closing Date; and
(b)with respect to representations and warranties of Seller, relating to tax liability or other tax matters, within the period commencing on the Closing Date and expiring on the date on which the last applicable limitation period (without giving effect to any voluntary extension(s) hereafter granted by or on behalf of DRC) under any applicable taxation legislation expires with respect to any fiscal year of DRC which is relevant in determining any relevant tax liability of DRC.

5.2           OCLG. The representations and warranties of OCLG contained in this Agreement, or any agreement, certificate or other document delivered or given pursuant to this Agreement, shall survive the completion of the transactions contemplated by this Agreement and, notwithstanding such completion or any investigation made by or on behalf of Seller, shall continue in full force and effect for the benefit of Seller and any claim in respect thereof shall be made in writing for a period of 18 months after the Closing Date.

5.3           General. The provision of this Section 5 respecting the expiration of claims periods is expressly subject to Section 10.3 hereof.

6.           [INTENTIONALLY LEFT BLANK]

7.           Additional Agreements

Each of Seller and OCLG shall take or cause to be taken all necessary or desirable actions, steps and corporate proceedings to approve or authorize the transactions contemplated by this Agreement and the execution and delivery of this Agreement and other agreements, understandings and documents contemplated hereby, and shall cause all necessary meetings of directors and stockholders to be held for such purpose.

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8.                  Deliveries and Conditions Precedent to Closing

8.1              Conditions Precedent to the Obligation of OCLG. The obligation of OCLG to complete the transactions contemplated herein is subject to the satisfaction of, or compliance with, on or before the Closing Date, each of the following conditions (each of which is acknowledged to be for the exclusive benefit of OCLG and may be waived by it in whole or in part):

(a)                Completion of due diligence review to its reasonable satisfaction by March 22, 2013;

(b)               The representations and warranties of Seller contained herein shall be true and correct as at the Closing Date to the best of their knowledge;

(c)                Seller shall have performed all of their obligations under this Agreement to be performed by them on or prior to the Closing Date and Seller shall not be in breach of any agreement on their part contained in this Agreement;

(d)               All documents relating to the due authorization and completion of the transactions contemplated hereby and all actions and proceedings taken on or prior to the Closing Date in connection with the performance by Seller of their obligations under this Agreement shall be satisfactory to OCLG and its counsel and OCLG shall have received copies of all such documents or other evidence as it may reasonably request in form and substance satisfactory to OCLG and its counsel and its counsel;

 

(e)             Receipt of necessary approvals by the state or local authorities, as needed;

(f)               Review of the DRC internal GAAP financial statements for the year ended August 31, 2011 and at August 31, 2012 in a manner and with results reasonably satisfactory to OCLG.

8.2              Conditions Precedent to Obligations to Seller. The obligation of Seller to complete the transactions contemplated hereunder is subject to the satisfaction of, or compliance with, on or before the Closing Date, each of the following conditions (each of which is acknowledged to be for the exclusive benefit of Seller and may be waived by them in whole or in part):

(a)                the representations and warranties of OCLG contained herein shall be true and correct as at the Closing Date;

(b)               OCLG shall have performed all its obligations under this Agreement to be performed by it on or prior to the Closing Date and OCLG shall not be in breach of any agreement on its part contained in this Agreement;

 

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(c)                all documents relating to the due authorization and completion of the transactions contemplated hereby and all actions and proceedings taken on or prior to the Closing Date in connection with the performance by OCLG of its obligations under this Agreement shall be satisfactory to Seller and their counsel and Seller shall have received copies of all such documents or other evidence as they may reasonably request in form and substance satisfactory to Seller and their counsel;

 

If any of the conditions contained in Section 8.2 hereof shall not be fulfilled or performed on or before the Closing Date to the reasonable satisfaction of Seller, Seller may, by written notice to OCLG, terminate all their obligations hereunder.

8.3              Conditions to the Seller and DRC’s Obligations. At closing, Seller shall receive from OCLG a certificate to the effect that:

(a)                the accuracy in all material respects (except for those representations and warranties that are qualified by materiality or a material adverse effect qualifier, which shall be true and correct in all respects) when made and on the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) of the representations and warranties of each OCLG contained herein;

(b)                all obligations, covenants and agreements of OCLG required to be performed at or prior to the Closing Date shall have been performed;

(c)                no action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement;

(d)            within 75 days of the closing date, OCLG shall have transferred ownership of its subsidiary Oncologix Corporation in partial settlement of an outstanding debtednesss of Oncologix Tech, Inc. in accordance with the requirements of the Nevada Law.

8.4              Conditions to OCLG’s Obligations. At Closing, OCLG shall receive a certificate of the Seller and DRC to the effect that:

(a)                the accuracy in all material respects (except for those representations and warranties that are qualified by materiality or a material adverse effect qualifier, which shall be true and correct in all respects) when made and on the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) of the representations and warranties of the Seller and DRC contained herein;

(b)               all obligations, covenants and agreements of the Seller and DRC required to be performed at or prior to the Closing Date shall have been performed;

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(c)                the Seller and DRC shall obtain with the cooperation of OCLG any and all Required Consents as hereinafter defined, if any, and shall have provided OCLG with true and correct copies thereof;

(d)               no action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement;

(e)                nothing shall have occurred or been discovered prior to the Closing Date that would reasonably be expected, either individually or collectively, to have a materially adverse effect on the business, operations, financial condition, prospects or assets of the Seller and DRC or their Affiliates Subsidiaries (a “Material Adverse Effect”);

 

9.                  Deliveries at Closing:

 

9.1              Deliveries by OCLG: At the Closing, or as described below, OCLG shall deliver to Seller and DRC:

(a)                Certificates for the New Preferred Shares as soon as possible after the Closing but no later than 30 days after the Closing;

(b)               Minutes of its Board of Directors approving the execution and delivery of this Agreement and each of the documents and instruments contemplated hereby and the election of R. Wayne Erwin as Director and CEO together with the resignation of one of its’ present directors and all of its CEO;

 

(c)           A certificate of compliance with representations warranties and covenants executed by its CEO;

(a)The Employment Agreement; and
(b)Such other documents and instruments as Seller or its counsel may reasonably request.

 

9.2Deliveries by Seller and DRC: At the Closing Seller and DRC shall deliver to OCLG:

 

(a)         Certificates for the DRC Shares;

 

(b)       Minutes of their governing bodies approving the execution and delivery of this Agreement and each of the documents and instruments contemplated hereby;

 

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(c)                A certificate of compliance with representations warranties and covenants executed by their CEO or managing member;

 

(d )                Evidence of the investment by a third party for the benefit of DRC of no less than $50,000;

 

(e )                An undertaking by counsel to issue a 10b-5 opinion to the Board of directors of OCLG with respect to the Form 8-K and any amendment thereto that discloses this Agreement and the transactions contemplated thereby; and

 

(f)                Such other documents and instruments as Seller or its counsel may reasonably request.

10.           Termination

This Agreement may not be terminated at any time prior to the Closing Date referred to in Section 3 hereof by OCLG, Seller or DRC except by their mutual consent or except in the case on a substantial and non-curable breach by the non-terminating party.

11.           Indemnification

11.1 Each party hereto agrees to indemnify and hold harmless the other party from and in respect of any cost, claim, loss, damage, liability or expense which such other party may suffer or incur, whether at law or in equity, arising out, resulting from or in connection with the inaccuracy of any representation or warranty contained herein, for the time periods provided in Section 5.1 hereof.

11.2                No claim for indemnification will arise until written notice thereof is given to the party from whom indemnification is sought or claimed (the “Indemnitor”). Such notice shall be sent within a reasonable time following the determination by the party seeking indemnification (the "Indemnitee") that a claim for indemnity may exist. In the event that any legal proceedings shall be instituted or any claim or demand is asserted by any third person in respect of which either party may seek any indemnification from the other party, the Indemnitee shall give or cause to be given to the Indemnitor written notice thereof and the Indemnitor shall have the right, at its option and expense, to be present at the defense of such proceedings, claim or demand, but not to control the defense, negotiation or settlement thereof, which control shall at all times remain with the Indemnitee, unless the Indemnitor irrevocably acknowledges full and complete responsibility for indemnification of the Indemnitee in respect of the subject claim, in which case the Indemnitor may assume such control through counsel of its choice; provided, however, that no settlement shall be entered into without the Indemnitee's prior written consent (which shall not be unreasonably withheld). The parties agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such third party legal proceeding, claim or demand.

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11.3                Notwithstanding anything in this Agreement to the contrary, the indemnity provided for in this Section 11 shall apply to any loss, claim, cost, damage, expense or liability, whether or not the actual amount thereof shall have been ascertained prior to the final day upon which a claim for indemnity with respect thereto may be made hereunder in accordance with Section 5 hereof, so long as written notice thereof shall have been given to the party from whom indemnification is sought prior to said date, setting forth specifically and in reasonable detail, so far as is known, the matter as to which indemnification is being sought, but nothing herein shall be construed to require payment of any claim for indemnity until the actual amount payable shall have been finally ascertained. 

12.                Notices

Notices required or permitted to be given under this Agreement shall be in writing and shall be deemed to be sufficiently given when sent by certified or registered mail or by overnight courier or by hand, addressed to the addresses set forth on the first page of this Agreement or to such other address furnished by notice given in accordance with this Section 11.

13.                Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. In the event there is any dispute between the parties as to their rights and obligations under this Agreement, the parties submit to the jurisdiction of any state or federal court sitting in Maricopa County, Arizona and waive any defense of inconvenient forum to the maintenance of any action so brought.

14.                Entire Agreement

This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof. There are no verbal statements, representations, warranties, undertakings or agreements between the parties. This agreement may be amended only by an instrument in writing signed by both parties.

15.                Time of the Essence

Time shall be of the essence of this Agreement.

16.                Assignment

Neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the prior written consent of the other party, which consent may be withheld in either party's sole and absolute discretion, except that OCLG may assign its rights hereunder to an entity that is substantially owned by OCLG without Seller’ consent.

17.                Binding Effect

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement may be executed in counterparts.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

  Oncologix, Tech Inc.
   
  By:
  Barry Griffith, CEO
   
   
  Clearview Medical, LLC
   
  By:
  R. Wayne Erwin
  Chief Executive Officer
   
   
  Dototo Research Corporation
   
  By:
  R. Wayne Erwin,
  Chief Executive Officer
   
   

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EX-10.2 3 oncologix8k3222013exh102.htm EXECUTIVE EMPLOYMENT AGREEMENT

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of March 15, 2013, by and between Oncologix, Tech, (Company), a company duly incorporated and validly existing under the laws of Nevada and Roy Wayne Erwin ("Executive"), with principal office located at 212 Edgewood Drive, Pineville, Louisiana, 71360.

RECITALS

A. WHEREAS, contemporaneously with this Agreement, Oncologix, Inc. has entered into an agreement with Clearview Medical, LLC pursuant to the terms of a Stock Purchase Agreement (“SPA”) dated effective the same date as this Agreement to acquire 1,000 shares of Common Stock of Dotolo Research Corporation from Clearview medical, LLC;

B. WHEREAS, the Company wishes to ensure that it will have the benefits and knowledge of Employee's services and expertise on the terms and conditions hereinafter set forth; and

C. WHEREAS, Dotolo Research Corporation is engaged in the business of the manufacture and distribution of medical device products and services used in gastrointestinal, OB/GYN, skilled nursing facilities, and health and wellness spas with distribution both U.S. and international.

D. WHEREAS, the Company desires to engage the Executive as its Chairman and Chief Executive Officer and on the Board of Directors and the Executive desires to provide employment services to the Company on all of the terms and conditions herein set forth.

E. WHEREAS, the Company desires to provide the Executive with compensation in recognition of the Executive's valuable skills and services.

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, the parties hereto agree as follows:

ARTICLE I. DEFINITION

In this Agreement, unless the context otherwise requires, the following words shall have the following meaning:

"Board" means the Board of Directors of the Company;

"Company" means Oncologix, a company duly incorporated and validly existing under the laws of the Nevada;

"Commencement Date" means February 22, 2013, the date of commencement of Employment;

"Company Group" means the Company and all of its subsidiaries;

"Employment" means the employment of the Executive under the terms herein;

"Executive" means Roy Wayne Erwin, a citizen of the United States of America ;

Confidentiality and Non-Competition Agreement" means the Confidentiality and Non-competition Agreement to be executed by and between the Company and Executive;

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ARTICLE II. POSITION AND DUTIES

2.1 Employment. The Company hereby employs the Executive as its Chairman and Chief Executive Officer and the Executive hereby accepts such engagement with the Company, in accordance with and subject to all of the terms, conditions and covenants set forth in this Agreement. The Executive principal office is located at 212 Edgewood Drive, Pineville, Louisiana 71360 and Dotolo Research Corporation manufacturing facilities located at 3731 East Lasalle Street, Phoenix, Arizona, 85040, and the Executive will travel as required both within the US and internationally.

2.2 Scope of Duties. The Executive shall be the Chairman and Chief Executive Officer and shall have such other or additional offices or positions with the Company as the Board of Directors (the "Board") shall determine from time to time. The Executive shall have responsibility for the following duties, operating within such established guidelines, plans or policies as may be established or approved by the Board from time to time:

(a) development of Company business plans, strategic plans, financial plans, directly responsible for the financial viability of the Company, assisting and supervising the financial and accounting matters of the Company and its subsidiaries, including organizing, managing and supervising the work of the President, Chief Financial Officer, Sales and Marketing Director, and oversight of the manufacturing/operations of the Company;

(b) assist the Chief Financial Officer in preparing the financial statements of the Company and its subsidiaries in accordance with accounting principles generally accepted in the United States ("USGAAP"), or such other accounting principles as the Board may direct, and recommending appropriate accounting treatment in accordance with USGAAP or such other principles;

(c) assist and cooperate with the Company's independent accountants in their audit and review of the Company's financial statements;

(d) participate in new product development, to improve, document, test and certify Company products, implement the Company's internal controls over financial reporting; assisting and cooperating with any consulting firm engaged by the Company in connection with such projects; oversight and supervising the CFO with implementation of internal controls over financial reporting in the Company's finance and accounting department; and assisting and cooperating with the Company's internal audit in the implementation and review of such controls;

(e) supporting the Company Board of Directors, company legal representative, and the Chief Financial Officer in such matters as preparation and presentation of such financial and statistical reports as may be requested from time to time and assisting in the Company's business and strategic planning and preparation of annual budgets;

 

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(f) participating in the preparation and filing of annual and quarterly reports (8k-10Q) and providing such certifications as may be required by the Security Exchange Commission (SEC) in connection therewith;

(g) participating in investor communications, including analyst conference calls, road shows and others; and

(h) such other responsibilities and duties customarily performed by the Chief Executive Officer of companies in the same industry and listed companies.

2.3 Other Business Affiliations. The Executive agrees that, without the approval of the Board, the Executive shall not, during the period of employment with the Company, devote more than 15% at any time to any other business affiliation which would interfere with or derogate from Executive's obligations under this Agreement. The Executive represents and warrants that his service as such Executive does not create any conflict of interest in relation to his duties and obligations to the Company hereunder, and agrees that in the event such a conflict arises, he will promptly report it to the Board.

2.4 No Breach of Duty. The Executive represents that the Executive's performance of this Agreement and as an employee of the Company does not and will not breach any agreement or duty to keep in confidence proprietary information acquired by the Executive in confidence or in trust (i) prior to employment with the Company or (ii) pursuant to his service referred to in Section 2.3. The Executive has not and will not enter into any agreement either written or oral in conflict with this Agreement. The Executive is not presently restricted from being employed by the Company or entering into this Agreement.

 

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ARTICLE III. DURATION

3.1 Commencement Date. The Executive's first day of employment shall be February 22, 2013 ("Commencement Date").

3.2 Term. This Agreement shall continue for an initial term of three (3) years from the Commencement Date unless otherwise terminated in accordance with Article 8 below. Upon the expiration of the initial term, this Agreement shall be automatically extended for successive periods of twelve (12) months, unless terminated by either party upon ninety (90) days' notice prior to the expiration of the initial term or any subsequent terms.

ARTICLE IV. COMPENSATION

4.1 Salary. The Executive shall be paid an initial base annual salary of $120,000 per annum, less deductions required by law, which shall be paid in equal monthly installments in the U.S. dollar equivalent with the Company's normal and customary payroll practices. Such salary shall be increased at a minimum of 5% per year, reviewed annually, and any base salary increases or decreases will be approved by the Board of Director, Compensation Committee. If inadequate funds are available, the salary and other benefits and expenses not paid to Executive, shall be accrued per quarter. At the end of the quarter, at the Executives option, the accrued salary may be converted into Company stock at a price equivalent to the lowest five (5) day average bid price during the preceding quarter.

4.2 PROFESSIONAL FEES. The Company shall have exclusive authority to determine the fees, or a procedure for establishing the fees, to be charged by the Company. All sums paid to the Executive or the Company in the way of fees or otherwise for other services of the Executive, shall, except as otherwise specifically agreed by the Company, be and remain the property of the Company and shall be included in the Company's name in such checking account or accounts as the Company may from time to time designate.

4.3 CLIENTS AND CLIENT RECORDS.  The Company shall have the authority to determine who will be accepted as clients of the Company, and the Executive recognizes that such clients accepted are clients of the Company and not the Executive. The Company shall have the authority to designate, or to establish a procedure for designating which professional Executive of the Company will handle each such client. All client records and files of any type concerning clients of the Company shall belong to and remain the property of the Company, notwithstanding the subsequent termination of this Agreement.

4.4 POLICIES AND PROCEDURES. The Company shall have the authority to establish from time to time the policies and procedures to be followed by the Executive in performing services for the Company. Executive shall abide by the provisions of any contract entered into by the Company under which the Executive provides services. Executive shall comply with the terms and conditions of any and all contracts entered by the Company.

4.5 Bonus. The Executive shall be eligible for an annual performance-based cash bonus at the discretion of the Board.

4.6 Reimbursable Expenses. The Company shall reimburse the Executive for all reasonable business expenses incurred in the performance of the Executive's duties hereunder on behalf of the Company, subject to submission of expense reports and approval according to the Company's financial regulations.

4.7 Automobile. During his employment, the Executive will be provided a Not to Exceed, flat rate of $ 650.00 per month as an automobile allowance by the Company payable within ten (10) days after the 1st of every month.

4.8 Income Taxes. The payment of tax, social security and similar payments arising out of this Agreement shall be dealt with by the parties in accordance with applicable laws and regulations.

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The Executive agrees to any withholdings that must be made by the Company pursuant to such laws and regulations. Furthermore, the Executive undertakes to promptly discharge any payments that are payable by him pursuant to such laws and regulations and agrees to indemnity the Company and hold the Company harmless from any and all claims made by any entity on account of an alleged failure by the Executive to satisfy such obligations.

ARTICLE V. OTHER BENEFITS, VACATION , HOLIDAYS, INSURANCE

5.1 Vacation. The Executive shall be entitled in each calendar year to twenty (20) working days' vacation with full salary (in addition to statutory holidays) to be taken at such reasonable time or times as approved by the Board. The Executive may accumulate and carry forward unused vacation to the following calendar year. The entitlement to vacation and, on termination of employment, vacation pay in lieu of vacation, shall accrue pro rata throughout each calendar year of the period of employment.

5.2 Holidays. The Executive shall be entitled to the all statutory public holidays observed.

5.3 Benefits. Employee shall be entitled to participate in any and all medical insurance, group health care programs (including dental, vision and prescription drug programs), disability insurance, pension and other benefit plans which are made generally available by the Company to other similarly situated senior level employees performing similar functions as Executive. The Company, in its sole discretion, may at any time amend or terminate its benefit plans or programs; provided, however, that the Company shall not do so except to the extent that such amendment or termination is in good faith and applies generally to all employees of the Company.

If the Company does not have an Executive Benefit program available, the company will provide a monthly fixed amount of $600.00 to secure Health/Dental and Long Term Disability insurance.

5.4 Key Man Insurance. The Company may maintain, at its expense, Key Man Life Insurance (the "Policy") on the life of Employee for the benefit of the Company with a benefit of One Million Dollars ($1,000,000). Employee's signature to this Agreement constitutes Employee's written consent to being insured under the Policy and that the Company may continue such life insurance coverage after Employee's employment with the Company terminates, regardless of the cause of such termination. Employee shall make all necessary applications, submit to physical examinations and otherwise cooperate with the Company with respect to the purchase of the policy.

5.5 Death of Executive. In the event the Executive shall die during the term hereof, the Company shall pay to the Executive's surviving spouse, or if the Executive shall leave no surviving spouse, then to the Executive's estate, only such amounts as may have been earned by the Executive prior to the Executive's date of death, but which were unpaid at date of death.

5.6 Life Insurance. Company shall provide a term life policy to Executive in the face value amount of 3x annual base salary.

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ARTICLE VI. CONFIDENTIALITY, NONSOLICITATION AND NONCOMPETITION

6.1 Confidentiality. During his employment, the Executive will have access to, will become acquainted with various trade secrets, confidential and proprietary information relating to the business of the Company and its subsidiaries, including but not limited to customer, employee, supplier, and distributor lists, contacts, addresses, information about employees and employee relations, training manuals and procedures, recruitment methods and procedures, business plans and projections, employment contracts, employee handbooks, information about customers and suppliers, price lists, costs and expenses, documents, budgets, proposals, financial information, inventions, patterns, processes, formulas, data bases, know how, developments, experiments, improvements, computer programs, manufacturing, recruitment and distribution techniques, specifications, tapes, and compilations of information, all of which are owned by the Company and its subsidiaries, other parties with which the Company and its subsidiaries do business ("Third Parties") or customers of the Company and its subsidiaries, and which are used in the operation of the business of the Company and its subsidiaries, or such Third Parties or customers. The Executive agrees at all times during the term of his employment and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose directly or indirectly to any person, firm or corporation without written authorization of the Board, any trade secrets or confidential information. In addition, the Executive understands "trade secret" or "confidential information" means all information concerning the Company and its subsidiaries, Third Parties and/or customers (including but not limited to information regarding the particularities, preferences and manner of doing business) that is (i) not generally known to the public and (ii) cannot be discovered or replicated by a third party without substantial expense and effort.

6.2 Non-Solicitation. The Executive agrees that during the Executive's employment and for a period of the later of two (2) years after the termination of employment hereunder where the Company does business, the Executive shall not:

(i) directly call upon or solicit any of the customers of the Company or its subsidiaries that were or became customers during the term of the Executive's employment (as used herein "Customer" shall mean any person or company as listed as such on the books of Company or its subsidiaries); or

(ii) induce or its subsidiaries attempt to induce any employee, agent or consultant of the Company or its subsidiaries to terminate his or her association with the Company or its subsidiaries.

6.3 Non-Competition. The Executive agrees that during the Executive's employment and for a period of two (2) years , subject to Section 2.3, devote full time to the business of the Company and will not directly or indirectly, engage, individually or as an officer, director, employee, consultant, advisor, partner or co-venture, or as a stockholder or other proprietor owning an interest in any firm, corporation, partnership or other organization in the business of manufacturing, selling or distributing products in competition with the products and/or services of the Company and its subsidiaries. The Executive shall, during the term of the Executive's employment and the term of the non-competition restriction, furnish to the Board a detailed statement of any outside employment or consulting services in which the Executive seeks to engage or invest, and, as from time to time requested by the Board, resubmit for approval a detailed statement thereof. In the event the Board determines in good faith that such violation or conflict exists, the Executive shall refrain from such employment, consulting services or investment.

6.4 Enforceability. The Executive agrees that, having regard to all the circumstances, the restrictions in this Article 6 are reasonable and necessary but no more than sufficient for the protection of the Company. The Company and Executive agree that:

(i) each restriction in this Article 6 shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason, the remaining restrictions shall not be affected; and

(ii) if any restriction is found to be void but would be valid and enforceable if some part of it were deleted or the period thereof were deleted or the range of activities or area dealt with thereby were reduced in scope, the restriction shall apply with such modifications as may be necessary to make it valid and enforceable.

6.5 Injunctive Relief. In the event of the breach or threatened breach by the Executive of this Article 6, the Company, in addition to all other remedies available to it at law or in equity, will be entitled to seek injunctive relief and/or specific performance to enforce this Article 6 in any court of competent jusridiction.

6.6 Assignment and Transfer. Executive’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void. This Agreement shall inure to the benefit of, and be binding upon and enforceable by, any purchaser of substantially all of Company’s assets, any corporate successor to Company or any assignee thereof.

 

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ARTICLE VII. ASSIGNMENT OF INVENTIONS AND INTELLECTUAL PROPERTY

7.1 The parties foresee that the Executive has created and may create designs or other intellectual property in the course of his duties hereunder and agree that in this respect the Executive has a special responsibility to further the interests of the Company.

7.2 Any invention, production, improvement or design made or process or information discovered or copyright work or trade mark or trade name or get-up source code or any other intellectual property created by the Executive during the continuance of his Employment hereunder (whether before or after the date hereof or whether capable of being patented or registered or not and whether or not made or discovered in the course of his employment hereunder) in conjunction with or in any way affecting or relating to the business of any company in the Company or capable of being used or adapted for use therein or in connection therewith shall forthwith be disclosed to the Company and shall belong to and be the absolute property of such company in the Company Group as the Company may direct.

7.3 The Executive if and whenever required to do by the Company shall at the expense of the Company apply or join in applying for letters patent or other protection or registration for any such invention, improvement design process information work trade mark name or get-up source code or other intellectual property rights as aforesaid which belongs to such company and shall at the expense of such company execute and do all instruments and things necessary for vesting the said letters patent or other protection or registration when obtained and all right title and interest to and in the same in such company absolutely and as sole beneficial owner or in such other person as the Company may specify.

7.4 The Executive hereby irrevocably appoints the Company to be his attorney in his name and on his behalf to execute and do any such instrument or thing and generally to use his name for the purpose of giving to the Company the full benefit of this Article and in favor of any third party a certificate in writing signed by any Executive or by the secretary of the Company that any instrument or act falls within the authority hereby conferred shall be conclusive evidence that such is the case.

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ARTICLE VIII. TERMINATION

8.1 Except as otherwise provided in Sections 3.3 and 8.2, the Executive employment may be terminated by either party giving the other not less than ninety (90) days' notice in writing provided that the Company shall have the option to pay salary (pro-rated) in lieu of any required period of notice. Notwithstanding the ninety (90) days' notice requirement in this Section 8.1, the Executive agrees to continue to perform his duties hereunder until a new Chief Executive Officer of the Company is appointed and ensure a smooth transition thereafter, and the terms of this Agreement shall continue to apply; provided that any such extension shall not exceed ninety (90) days. During such ninety (90) days' notice period and any extension thereof pursuant to this Section 8.1, the Company shall use its diligent efforts to recruit a new Chief Executive Officer.

8.2 Notwithstanding the other provisions of this Agreement, the Company may terminate the Employment with cause forthwith without prior notice (but without prejudice to the rights and remedies of the Company) for any breach of this Agreement in any of the following cases:

(i) if the Executive fails or neglects efficiently and diligently to carry out his duties to the reasonable satisfaction of the Board; 

(ii) if the Executive is guilty of serious misconduct in connection with the Employment;

(iii) if the Executive is convicted of any criminal offense, which might reasonably be thought to adversely affect the performance of his duties;

(iii if the Executive does any act or thing which may bring serious discredit on the Company or the Company Group;

(iv) if the Executive commits any serious breach of the Company's By-Laws and operating procedures (as laid down by the Company and communicated to the Executive from time to time) and has caused serious financial loss to the Company;

(v) if the Executive fails to observe and perform any of the duties and responsibilities imposed by this Agreement or which are imposed by law, or is in breach of any representation, warranty or covenant made by the Executive under this Agreement;

(vi) if the Executive becomes unsound of mind or suffers from a mental disorder; or

(vii) if the Executive otherwise acts in breach of this Agreement so as materially to prejudice the business of the Company or the Company Group.

8.3 The Executive shall not, at any time after termination of the Employment for whatever reason, represent himself as being in any way connected with the business of the Company.

8.4 Upon termination of the Employment for whatever reason, the Executive shall forthwith deliver to the Company or its authorized representative such of the following as are in his possession or control:

(i) All keys, security and computer passes, plans statistics, documents, records, papers, magnetic disks, tapes or other software storage media including all copies, records and memoranda (whether or not recorded in writing or on computer disk or tape) made by the Executive of any confidential or proprietary information relating to the business of the Company and its subsidiaries;

(ii) All credit cards and charge cards provided for the Executive's use by the Company; and

(iii) All other property of the Company not previously referred to in this Article; and

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(iv) any breach of this Agreement, which breach is not cured within thirty (30) days following written notice of such breach; and

8.5 Termination With-Out Cause. The Company may terminate Executive’s employment hereunder at any time without cause, provided, however, that Executive shall be entitled to severance pay in the amount of 26 weeks of Base Salary in addition to accrued but unpaid Salary and accrued vacation, less deductions required by law, but only if, Executive executes a valid and comprehensive release of any and all claims that the Executive may have against the Company in a form provided by the Company and Executive executes such form within ten (10) days of tender.

8.6 Resignation. Upon termination by reason of “For Cause “of employment, Executive shall be deemed to have resigned from the Board of Directors of the Company.

8.7 DISABILITY OF EXECUTIVE

The Company may terminate this Agreement without liability if Executive shall be permanently prevented from properly performing his essential duties hereunder with reasonable accommodation by reason of illness or other physical or mental incapacity for a period of more than 180 consecutive days. Upon such termination, Executive shall be entitled to all accrued but unpaid Base Salary and vacation.

(i) Definitions - For purposes of this Agreement, whenever used in this Section 8.3:

"Total disability" shall mean that the Executive is unable, mentally or physically, whether it be due to sickness, accident, age or other infirmity, to engage in any aspect of the Executive's normal duties as set forth in this Agreement.

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"Partial disability" shall mean that the Executive is able to perform, to some extent, on behalf of the Company, the particular services in which the Company specializes, and which the Executive previously performed for the Company, but that the Executive is unable, mentally or physically, to devote the same amount of time to such services as was devoted prior to the occurrence of such sickness or accident.

"Normal monthly salary" shall mean the salary which the Executive is being paid by the Company per month as of the commencement date of the period of disability, as specified hereinabove or as determined by the Board of Directors pursuant to the terms hereof.

(ii) Total Disability

During a single period of total disability of the Executive, the Executive shall be entitled to receive from the Company, the Executive's normal monthly salary for the shorter of first three (3) months of disability or until any disability insurance policy available through the Executive’s employment begins to pay benefits. If the single period of disability should continue beyond three (3) months, the Executive shall receive only such amount as the Executive shall be entitled to receive under disability insurance coverage on the Executive, if any.

(iii) Partial Disability

During a period of partial disability of the Executive, the Executive shall receive an amount of compensation computed as follows:

That portion of the Executive's normal monthly basic compensation which bears the same ratio to the Executive's normal monthly basic compensation as the amount of time which the Executive is able to devote to the usual performance of services on behalf of the Company during such period bears to the total time the Executive devoted to performing such services prior to the commencement date of the single period of disability, and such amount shall be calculated by multiplying the Executive’s basic compensation by a fraction, the numerator of which shall be the percentage of normal services that the Executive is able to perform and the denominator which shall be the total services that the Executive is able to perform absent the partial disability.

(iv) Combination of Total and Partial Disability

If a single period of disability of the Executive consists of a combination of total disability and partial disability, the maximum total disability compensation to which the Executive shall be entitled from the Company under this disability provision shall not exceed an amount equal to one (1) times the Executive's normal monthly basic compensation.

(V) Broken Periods of Disability

A period of disability may be continuous or broken. If broken into partial periods of disability which are separated by intervening periods of work, there shall be aggregated together all of such successive partial periods of disability except any period prior to the time when any single period of work extends for three months or longer; and such aggregated periods of disability shall be treated as a single period in determining the amount of disability compensation to which an Executive shall be entitled under any provision of this Section.

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8.6 Termination Due to Disability

If and when the period of total or partial disability of the Executive totals [NUMBER] months, the Executive's employment with the Company shall automatically terminate. Notwithstanding the foregoing, if the disabled Executive and the Company agree, the disabled Executive may thereafter be employed by the Company upon such terms as may be mutually agreeable.

8.7 Commencement Date of Disability

The commencement date of a period of disability, whether it be a continuous period or the aggregate of successive partial periods, shall be the first day on which the Executive is disabled.

8.8 Dispute Regarding Existence of Disability

Any dispute regarding the existence, extent or continuance of the disability shall be resolved by the determination of a majority of three (3) competent physicians, one (1) of whom shall be selected by the Company, one (1) of whom shall be selected by the Executive and the third (3rd) of whom shall be selected by the other two (2) physicians so selected.

ARTICLE IX- INDEMNIFICATION

9.1 The Executive hereby agrees to indemnify and hold the Company and its officers, directors, shareholders and Executives harmless from and against any loss, claim, damage or expense, and/or all costs of prosecution or defense of their rights hereunder, whether in judicial proceedings, including appellate proceedings, or whether out of court, including without limiting the generality of the foregoing, attorneys' fees, and all costs and expenses of litigation, arising from or growing out of the Executive's breach or threatened breach of any covenant contained herein.

9.2 The Company hereby agrees to indemnify and hold the Executive harmless from and against any loss, claim, damage or expense, and/or all costs of prosecution or defense of their rights hereunder, whether in judicial proceedings, including appellate proceedings, or whether out of court, including without limiting the generality of the foregoing, attorneys' fees, and all costs and expenses of litigation, arising from or growing out of the Company’s breach or threatened breach of any covenant contained herein.

ARTICLE X. MISCELLANEOUS PROVISIONS/JURISDICTION

10.1 Severability. I If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, such term or provision shall be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining terms and provisions hereof, and this Agreement shall be construed as if such invalid or unenforceable term or provision had not been contained herein.

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10.2 Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies.

10.3 Nonwaiver. No failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of any other right, power or privilege or of the same right, power or privilege in any other instance. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by an officer of the Company (other than Executive) or other person duly authorized by the Company.

10.4 Assistance in Litigation. Executive shall, during and after termination of employment, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become a party; provided, however, that such assistance following termination shall be furnished at mutually agreeable times and for mutually agreeable compensation.

10.5 Survival. Articles 6 and 7 and Section 9.7 shall survive the termination of this Agreement.

10.6 Entire Agreement. This Agreement, together with all award agreements and long-term incentive agreements is the entire agreement between the parties hereto concerning the subject matter hereof and supersedes and replaces all prior or contemporaneous agreements or understandings between the parties.

10.7 Employment Amendments. This Agreement may not be amended or modified in any manner, except by an instrument in writing signed by duly authorized members of the Board.

10.8 Notices. Unless otherwise provided herein, any notice required or permitted under this Agreement shall be given in writing and shall be deemed to have been duly given upon personal delivery to the party to be notified or five (5) business days after being mailed by United States certified or registered mail, postage prepaid, return receipt requested or two (2) days after being sent by Federal Express or other recognized overnight delivery to the following respective addresses, or at such other address as each may specify by notice to the other:

 

 

 

Notice to the Executive:

Roy Wayne Erwin

Chairman-Chief Executive Officer

212 Edgewood Drive

Pineville, Louisiana 71360

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10.9 Governing Law. This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of Louisiana.

11.1 Jurisdiction. Unless otherwise provided for in this Agreement, the courts within the Parish of Rapides, and the City of Alexandria, Louisiana shall have exclusive jurisdiction to adjudicate any dispute arising out of this Agreement and/or employment relationship or termination thereof and the Executive consents to such jurisdiction and venue. 

11.2 Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against the Company or Executive.

11.3 Nonwaiver. No failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of any other right, power or privilege or of the same right, power or privilege in any other instance. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by an officer of the Company (other than Executive) or other person duly authorized by the Company.

11.4 Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or the employment relationship, either during the existence of the employment relationship or afterwards, between the parties hereto, their assignees, their affiliates, their attorneys, or agents, shall be settled by arbitration in Alexandria, Louisiana. Such arbitration shall be conducted in accordance with the then prevailing commercial arbitration rules of the State of Louisiana but the arbitration shall be in front of an arbitrator, with the following exceptions if in conflict: (a) one arbitrator shall be chosen by Roy Wayne Erwin; (b) each party to the arbitration will pay its pro rata share of the expenses and fees of the arbitrator(s), together with other expenses of the arbitration incurred or approved by the arbitrator(s); and (c) arbitration may proceed in the absence of any party if written notice of the proceedings has been given to such party. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided however, that nothing in this subsection shall be construed as precluding the Company from bringing an action for injunctive relief or other equitable relief or relief under the Confidential Information and Invention Assignment Agreement. The arbitrator shall not have the right to award punitive damages, consequential damages, lost profits or speculative damages to either party. The parties shall keep confidential the existence of the claim, controversy or disputes from third parties (other than the arbitrator), and the determination thereof, unless otherwise required by law or necessary for the business of the Company. The arbitrator(s) shall be required to follow applicable law.

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IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO.

 

12.0 Acknowledgment. The Executive acknowledges that when this Agreement is concluded, the Executive will be able to earn a living without violating the foregoing restrictions and that the Executive's recognition and representation of this fact is a material inducement to the execution of this Agreement and to Executive's continued relationship with the Company.

12.1 Survival of Covenants . All restrictive covenants contained in this Agreement shall survive the termination of this Agreement.

12.2 Limitations on Authority . Without the express written consent from the Company, the Executive shall have no apparent or implied authority to: (i) Pledge the credit of the Company or any of its other Executives; (ii) Bind the Company under any contract, agreement, note, mortgage or otherwise; (iii) Release or discharge any debt due the Company unless the Company has received the full amount thereof; or (iv) sell, mortgage, transfer or otherwise dispose of any assets of the Company.

12.3 Representation and Warranty of Executive. The Executive acknowledges and understands that the Company has extended employment opportunities to Executive based upon Executive's representation and warranty that Executive is in good health and able to perform the work contemplated by this Agreement for the term hereof.

12.4 Invalid Provision; Severability . The invalidity or unenforceability of a particular provision of this Agreement shall not affect the other provisions hereof, and the Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

12.5 Entire Agreement. This Agreement contains the entire agreement and supersedes all prior agreements and understandings, oral or written, with respect to the subject matter hereof. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification, or discharge is sought.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

duly executed and delivered as of the day and year first above written.

 

  Oncologix, Tech,
   
  By:_______________________________________
   
  Name: Roy Wayne Erwin
   
  Title: Chairman and CEO

 

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