Ex-10.16 Assumption Agreement



 





EXHIBIT 10.16




ASSUMPTION AGREEMENT




               This Assumption Agreement (this “Agreement”) is entered into as of the
15th day of November, 2002, by and among Invest Linc Equity Fund II, a Nevada
limited partnership (“Equity Fund”), Invest Linc Emerging Growth Equity Fund I,
L.L.C., a Nevada limited liability company (“Growth Fund” and together with
Equity Fund referred to jointly as “Lenders”) and SinoFresh HealthCare, Inc., a
Delaware corporation (“New Borrower”). In addition, the party defined as the
“Original Borrower” in the first Recital paragraph hereof has joined in this
Agreement for purposes of evidencing its consent hereto and agreement with the
matters set forth herein.



RECITALS




               WHEREAS, Lenders previously entered into two certain Security Agreements
(the “Loan Agreements”), dated as of February 1, 2001, the first by and between
Growth Fund and SinoFresh Laboratories, Inc., an Alabama corporation (herein,
the “Original Borrower”) and the second by and between Equity Fund and Original
Borrower. Original Borrower also executed two notes in the aggregate amount of
Five Hundred Thousand Dollars ($500,000) dated as of February 1, 2001 (the
“Notes”). Terms used herein with initial capital letters, to the extent not
otherwise defined herein, shall have the meanings set forth in the Notes and
Loan Agreements;



               WHEREAS, New Borrower will acquire all or substantially all of the assets
of Original Borrower (herein, the “Acquisition”) as of November 15, 2002
subject to an Asset Purchase Agreement (the “Acquisition Agreement”); and



               WHEREAS, prior to the consummation of the Acquisition, Lenders have
notified Original Borrower of the existence of certain Events of Default, and
Lenders and Original Borrower have negotiated the terms and conditions upon
which Lenders would forbear from exercising their rights and remedies under the
Loan Agreements and the Notes; and



               WHEREAS, New Borrower has agreed to assume the obligations of the Notes
subject to amending certain terms and conditions of repayment through execution
of allonges (the “Allonges”).



               WHEREAS, New Borrower, in consideration of Lenders agreeing to certain
terms in this Agreement and the Allonges, is issuing shares of its common stock
to Lenders pursuant to a Stock Purchase Agreement of even date herewith (the
“Stock Purchase Agreement”);



               WHEREAS, Lenders’ consent to the Acquisition is necessary in order to
avoid giving rise to an additional Event of Default under the Loan Agreements,
and Original Borrower and New Borrower have requested that Lenders consent to
the Acquisition; and



               WHEREAS, Lenders have agreed to consent to the Acquisition, subject to New
Borrower joining in and assuming all obligations of Original Borrower under the
Allonges and Loan Agreements; and



 









 





               WHEREAS, in order to satisfy the requirements of Lenders, New Borrower
desires to join in the Allonges and Loan Agreements as an additional Debtor
thereunder.



               NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter expressed, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:



AGREEMENT




               1. Assumption of Obligations. New Borrower hereby (a) adopts the terms
and conditions of (i) the Loan Agreements, as the same are amended hereby, as
it may hereafter be amended, modified, renewed, restated or replaced, and (b)
assumes all of the obligations under the Loan Agreements and Notes, as amended
by the Allonges, (the “Obligations”) to the fullest extent. Without limiting
the generality of the foregoing, New Borrower hereby joins in each and every
grant of a security interest pursuant to the Loan Agreements and the Notes in
favor of Lenders to the extent of the assets being transferred in the
Acquisition and certain other intellectual property of New Borrower (the
“Assets of New Borrower”), and hereby restates all representations and
warranties of Debtor, as set forth in the Loan Agreements and the Notes, as
amended by the Allonges, with respect to the validity, priority, perfection,
and enforceability of all liens and security interests granted hereby. For all
purposes under the Loan Agreements and the Notes, New Borrower shall be
obligated as a “Debtor” thereunder, to the same extent as if New Borrower had
been an original party to the Loan Agreements and the Notes, as amended and as
if no default had occurred. Lenders shall be entitled to enforce all
obligations to which the Original Borrower is subject against New Borrower in
all respects. For all purposes under the Loan Agreements, the Notes and this
Agreement, all references hereinafter made to Debtor shall mean and include
each of the Original Borrower and New Borrower.



               2. Consent of Lenders. Upon satisfaction of all conditions to closing set
forth in Section 4 below and payment of fees and costs set forth in Section 5,
Lenders hereby consent to the acquisition by New Borrower of substantially all
of the assets of Original Borrower and waive the default of Original Borrower
under the Loan Agreements and the Notes.



               3. Amendments and Conforming Changes to Loan Agreements. Upon satisfaction
of the conditions precedent to closing set forth in Section 4 below, the Loan
Agreements and the Notes shall be deemed amended in the following respects:




          (a) All references to Borrower shall mean and include each of the
Original Borrower and New Borrower. All references to the Collateral shall
include the assets owned by New Borrower as listed on Schedule I hereto;




          (b) Those particularized items of Borrower information set forth in
the Loan Agreements, are intended to apply only to Original Borrower. The
comparable information applicable to New Borrower is set forth on Schedule
II attached hereto;




          (c) New Borrower hereby restates all representations and warranties
of Original Borrower as set forth in the Loan Agreements and the covenants
set forth in the Notes,



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as amended by the Allonges, effective as of the date of this
Agreement, except to the extent that such representations or
warranties specifically related to (i) jurisdiction of organization
to which New Borrower represents and warrants to being organized and
in good standing in the State of Delaware rather than the State of
Alabama and (ii) Pledgor’s ownership interest of the Debtor to which
New Borrower makes no representation or warranty; and




          (d) The parties have entered into this Agreement at this time in
order to accommodate the target closing schedule with respect to the
Acquisition. Notwithstanding that fact, the parties have agreed that each
shall have the opportunity to identify additional provisions of the Loan
Agreements as to which clarification, in a manner similar to Section 3(b)
above, is appropriate, and shall reasonably cooperate with each other in
setting forth such clarification in a subsequent side letter.



               4. Conditions to Closing. The effectiveness of this Agreement and of
Lenders’ consent to the Acquisition is conditioned upon the satisfaction of
each of the following conditions precedent, in form and substance reasonably
satisfactory to Lenders and their counsel, on or before the date hereof (unless
some later date is specified, in which event New Borrower shall be permitted to
deliver or cause such item to be delivered on or before such later date):




          (a) New Borrower shall have delivered or caused to be delivered to
Lenders the following documents, all of which shall be properly completed,
fully executed, and otherwise satisfactory to Lenders in all material
respects:




	(i)	 	this Agreement;
	 
	(ii)	 	the Stock Purchase
Agreement;
	 
	(iii)	 	a Consulting Agreement
between New Borrower and The Invest Linc Group,
LLC;
	 
	(iv)	 	the Acquisition Agreement;
	 
	(v)	 	an Allonge to each of the
Notes, to evidence the assumption of all
Obligations thereunder by New Borrower and the
amendment of the payment and conversion terms
therein;
	 
	(vi)	 	UCC-1 Financing Statements
relative to New Borrower, for filing in such
jurisdictions as Lenders deem necessary in order to
perfect Lenders’ liens on the assets of New
Borrower;
(vii) proper resolutions of New
Borrower approving the transactions contemplated
hereby to which it is a party (“Consent”); and
	 
	(vii)	 	
proper resolutions of New
Borrower approving the transactions contemplated
hereby to which it is a party (“Consent”); and




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	(viii)	 	such additional documents or instruments as
Lenders deem reasonably necessary in connection
with the closing of the Acquisition.






          (b) New Borrower shall provide to Lenders’ counsel opinions relative
to New Borrower, addressing such matters as Lenders deem appropriate,
including without limitation the organizational status of New Borrower,
its power and authority to assume all Obligations under the Loan
Agreements as a Debtor thereunder, and the proper authorization for New
Borrower to execute and deliver this Agreement and the other documents
referred to herein; provided however, that counsel will not be required to
opine as to title of the Assets of New Borrower or the perfection of any
security interest. The opinions to be delivered by New Borrower’s legal
counsel shall be comparable in scope to those opinions delivered by
counsel to Original Borrower at the time of the original Closing of the
Loan on or about February 1, 2001.




          (c) Lenders shall have received evidence that all approvals and/or
consents of or other actions by, any entity or person whose approval or
consent is necessary or required to enable New Borrower to perform its
obligations under this Agreement, have been obtained.



          5. Fees and Expenses. New Borrower shall pay as a condition precedent to
closing, all costs and expenses arising from the preparation of this Agreement,
including Lenders’ reasonable attorneys’ fees and all of Lenders’ and its
attorneys’ out-of-pocket costs and expenses incurred in connection with the
negotiation and documentation of this Agreement, and any other costs, expenses
or charges that may be imposed on or incurred by Lenders as a result of this
Agreement up to an amount not to exceed Ten Thousand Dollars ($10,000).



          6. Confirmation of Security Interests. New Borrower hereby confirms and
agrees that Lenders’ security interest in and to the Collateral, as it existed
immediately prior to this Agreement, shall remain in full force and effect
until the Notes have been paid in full to Lenders and further acknowledges that
a new security interest has been attached to the additional Collateral listed
on Schedule I and filed with the State of Delaware as of the filing of the
UCC-l Financing Statements relative to New Borrower with the Secretary of State
of the State of Delaware.



          7. No Waiver of Defaults. Other than to the extent provided in Section 2
above, this Agreement in no way acts as a waiver of any future default of
Debtor except as specifically agreed upon herein or as a release or
relinquishment of any of the liens, security interests, rights or remedies
securing payment of the Loans or for the enforcement thereof, including,
without limitation, the liens created by the Notes. Such liens, security
interests, rights and remedies are hereby ratified, confirmed, preserved,
renewed and extended by Debtor in all respects.



          8. Benefit of this Agreement. The terms and provisions of this Agreement
and the Notes shall be binding upon and inure to the benefit of Lenders and
each Debtor and their respective successors and assigns, except that neither
Debtor shall have any right to assign its rights under this Agreement or any of
the Notes or any interest therein without the prior written consent of Lenders.



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          9. Choice of Law. This Agreement shall be performed and construed in
accordance with the laws of the State of Arizona.



          10. Entire Agreement. Except as modified by this Agreement, the Notes
remain in full force and effect. The Loan Agreements, as modified by this
Agreement and the Notes, as modified by the Allonges and the Stock Purchase
Agreement, embody the entire agreement and understanding among Debtor and
Lenders and supersede all prior agreements and understandings between said
parties relating to the subject matter thereof.



          11. Counterparts; Telecopy Execution. This Agreement (including the
Consent)
may be executed in any number of separate counterparts, each of which, when
taken together, shall constitute one and the same agreement, admissible into
evidence, notwithstanding the fact that all parties have not signed the same
counterpart. Delivery of an executed counterpart of this Agreement by facsimile
shall be equally as effective as delivery of a manually executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement
by facsimile shall also deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.



          12. Right to Participate. For so long as the Notes are outstanding, and
New Borrower proposes to raise additional capital through an offering or
placement of its equity or debt, Lenders shall be granted the right to
participate in such offering upon the terms and subject to the same conditions
as are being proposed by New Borrower; provided however, if, as a condition to
any such offering or placement New Borrower must grant exclusive underwriting
or placement agent rights to a third party, Lenders agree that it shall not
participate in such offering or placement.



          13. Agreement to be Bound. Lenders agree that should they convert the
Notes into equity of New Borrower such equity of New Borrower shall be subject
to the 2002 Stockholders Agreement of New Borrower, as amended to the date of
conversion.



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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day, month, and year first above written.



	 	 	 	 	 	 	 
	SinoFresh HealthCare, Inc.	 	SinoFresh Laboratories, Inc.
	a Delaware corporation	 	   an Alabama corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ Andrew Badolato
	 	By:
	 	/s/ Charles Fust
	

	 	
 
	 	 	 	
 
	

	 	Name: Andrew Badolato
	 	 	 	Name: Charles Fust
	

	 	Title: President
	 	 	 	Title: President
	 
	 	 	 	 	 	 
	Invest Linc Equity Fund II,	 	Invest Linc Emerging Growth Equity Fund I,
	a Nevada limited partnership	 	L.L.C.,
	 	 	 	 	a Nevada limited liability company
	 
	 	 	 	 	 	 
	By:

	 	/s/ Craig Terrill
	 	By:
	 	/s/ Craig Terrill
	

	 	
 
	 	 	 	
 
	

	 	Name: Craig Terrill

Title: General Partner
	 	 	 	Name: Craig Terrill

Title: Managing Member







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SCHEDULE I

COLLATERAL DESCRIPTION



Those assets listed on Exhibit A to the Asset Purchase Agreement between
SinoFresh Laboratories, Inc. and SFH, dated December 31, 2002.



Patents numbered 6,344,210, dated February 5, 2002, numbered 6,083,525., dated
July 4, 2000, numbered 5,785,988, dated July 28, 1998,




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SCHEDULE II

New Borrower Information




	 	 	 
	State of Organization:

	 	Delaware
	 
	 	 
	Prior Names:

	 	None
	 
	 	 
	Fictitious Names:

	 	None
	 
	 	 
	Borrower Locations:

	 	313 Seaboard Avenue, Venice, Florida 34292,

7820 South Holiday Drive, Suite 320, Sarasota, FL 34231
	 
	 	 
	Permitted Encumbrances:

	 	None
	 
	 	 
	Pending Litigation:

	 	None
	 
	 	 
	Federal Employer ID No.:

	 	[Omitted]
	 
	 	 
	Fiscal Year End:

	 	December








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