Document:

daneexh10_1.htm

 Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

THIS AGREEMENT is made effective as of the 29th day of January, 2014.

AMONG:

 

DANE ACQUISITION CORP., a corporation incorporated under the

laws of the state of Nevada with an address of 500 McLeod Trail

East - #5178, Bellingham, Washington, USA 98226.

 

(the “Purchaser”)

 

OF THE FIRST PART

AND:

 

DANE EXPLORATION INC., a corporation incorporated under the 

laws of the state of Nevada with an address of 500 McLeod Trail 

East - #5178, Bellingham, Washington, USA 98226.

 

(“Dane”)

 

OF THE SECOND PART

AND:

 

PORTUS HOLDINGS INC., a corporation incorporated under the 

laws of the state of Nevada with an address of 401 E Las Olas Blvd., 

Suite 1400, Ft. Lauderale, Florida, USA 33301.

 

(the “Vendor”)

 

OF THE THIRD PART

AND:

 

DAVID CHRISTIE, an individual with an address of 3577 – 349 

West Georgia Street, Vancouver, British Columbia, Canada 

V6B 3Y4.

 

(the “Principal Shareholder”)

 

OF THE FOURTH PART

WHEREAS:

A.           The Vendor owns, operates and carries on the Business (as defined below).

B.           The Purchaser now wishes to purchase the assets of the Business (the “Purchased Assets”), which are set out in Schedule A and exclude the Excluded Assets (as defined below), and the Vendor has agreed to sell to the Purchaser the Purchased Assets on and subject to the terms and conditions of this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the foregoing and of the sum of $10.00 paid by the each party to the other, the receipt of which is hereby acknowledged, the parties hereto agree each with the other as follows:

1.             INTERPRETATION

1.1           Where used herein or in any amendments or Schedules hereto, the following terms will have the following meanings:

 

 

  

  

  

 

 

	
  

	
(a)

	
“Agreement” means this Asset Purchase Agreement, including all schedules, and all instruments supplemental to or in amendment or confirmation of this Agreement;

	
  

	
(b)

	
“Business” means the global, multilingual, cloud based food and beverage service online portal business owned and operated by the Vendor and as more particular described in the Vendor’s reports and registration statements filed with the SEC pursuant to the Exchange Act and the Securities Act, including, but not limited to, the Vendor’s Amendment No. 3 to the Vendor’s Registration Statement on Form S-1 (SEC File No. 333-186588) filed with the SEC on or about November 7, 2013;

	
  

	
(c)

	
“Closing Date” means February 12, 2014 or such other date as agreed in writing by the parties;

	
  

	
(d)

	
“Dane Financial Statements” means the audited financial statements for the year ended September 30, 2013, filed with the SEC;

	
  

	
(e)

	
“Dane Shares” means the 50,000,000 shares of the Purchaser’s common stock to be issued to the Vendor in accordance with the terms of this Agreement.

	
  

	
(f)

	
"Employment Agreements" means the employment, service and pension agreements of the Vendor set forth in Schedule C.

	
  

	
(g)

	
"Exchange Act" means the United States Securities Exchange Act of 1934.

	
  

	
(h)

	
"Excluded Assets" means those assets of the Vendor pertaining to the Business that will not be acquired by the Purchaser and set forth in Schedule F.

	
  

	
(j)

	
“Material Agreements” mean the material agreements of the Vendor set forth in Schedule E;

	
  

	
(k)

	
“MI 51-105” means Canadian Multilateral Instrument 51-105 – Issuers Quoted in the U.S. Over-The-Counter Markets;

	
  

	
(l)

	
“Permitted Encumbrances” mean the security interests granted by the Vendor and disclosed to the Purchaser, as listed in Schedule B;

	
  

	
(m)

	
“Principal Shares” means the 50,000,000 presently issued restricted shares in the common stock of Dane held by the Principal Shareholder;

	
  

	
(n)

	
“Purchased Assets” means all of the assets, property and undertaking, except for the Excluded Assets, primarily owned and used by the Vendor or held by it for use in, or in respect of the operation of, the Business including, without limitation the following properties and assets:

	
  

	
(i)

	
all fixed assets, machines, machinery, equipment (including, without limitation, manufacturing and quality control equipment and office equipment including computer equipment), fixtures, furniture, furnishings, vehicles and other tangible property, if any, used or held by the Vendor primarily in respect of the Business whether located in or on the premises of the Vendor or elsewhere, including, without limitation, those listed in Schedule A;

	
  

	
(ii)

	
all lands and premises and freehold and leasehold property and interest therein, owned by the Vendor and all plant, buildings, structures, erections, improvements, appurtenances and fixtures (including fixed machinery and fixed equipment) situate thereon or forming part thereof including, without limitation, the lands and premises set forth in Schedule D and all plants, buildings, structures, improvements, appurtenances and fixtures situate on or forming part thereof;

 

 

  

  

  

 

 

	
  

	
(iii)

	
all right, title and interest of the Vendor in, to and under all contracts and agreements and other rights of or pertaining to the Business and all right, title and interest of the Vendor in, to and under the material contracts and agreements described in Schedule E; provided that the Purchaser shall in no event be liable or responsible for any liabilities or obligations which shall be in existence, or accruing, at the Closing Date;

	
  

	
(iv)

	
all right, title, benefit and interest of the Vendor in respect of all registered or unregistered trademarks, logos and trade names of or pertaining to the Business or owned by the Vendor including, without limitation, those listed in Schedule A and all renewals, modifications and extensions thereof;

	
  

	
(v)

	
all patterns, plans, designs, research data, copyrights, trade secrets and other proprietary know-how, processes, drawings, technology, unpatented blue prints, flow sheets, equipment and parts listed and descriptions and related instructions, manuals, data, records and procedures including those listed in Schedule A and any and all data used in the Business, and all licenses, agreements and other contracts and commitments relating to any of the foregoing to which the Vendor is a party except for the Excluded Assets;

	
  

	
(vi)

	
all amounts prepaid in connection with the Business and the Purchased Assets including, without limitation, taxes, business taxes, rents, telephone and insurance;

	
  

	
(vii)

	
the goodwill of the Business including, without limitation, the exclusive right to the Purchase to represent itself as carrying on the Business in continuation of and in succession to the Vendor and all right, title and interest of the Vendor in, to and in respect of the name “Portus Cloud” and variations thereof;

	
  

	
(viii)

	
the full benefit of all warranties and warranty rights (implied, express or otherwise) against manufacturers or sellers which apply to any of the Purchased Assets;

	
  

	
(ix)

	
all books and records and files relating to the Business, stored on any type of media (other than those that form part of the Excluded Assets) including, without limitation, all production, inventory, sales and customer records and lists (containing addresses, phone numbers and business contacts of such customers and all correspondence, research materials, contract documents, licenses and permits, except that where the Vendor is required by law to retain a particular book, record or file, it shall retain such book, record or file and deliver to the Purchaser a copy thereof;

	
  

	
(x)

	
all accounts receivable (other than those that form part of the Excluded Assets); and

	
  

	
(xi)

	
all other rights, property and assets (other than the Excluded Assets) of the Vendor primary in connection with the Business, of whatsoever nature or kind and wherever situated.

	
  

	
(o)

	
“Real Property” means the real property and leases of the Vendor set forth in Schedule D; and

	
  

	
(p)

	
“SEC” means the United States Securities and Exchange Commission;

	
  

	
(q)

	
“Securities Act” means the United States Securities Act of 1933, as amended; and

	
  

	
(r)

	
“Vendor Financial Statements” means the audited annual financial statements for the year ended December 31, 2012 and the unaudited interim financial statements for the period ended September 30, 2013.

1.2         All dollar amounts referred to in this agreement are in United States dollars, unless expressly stated otherwise.

 

 

  

  

  

 

1.3         The following schedules are attached to and form part of this Agreement:

Schedule A – List of Assets

Schedule B – List of Permitted Encumbrances

Schedule C – Employment, Service & Pension Agreements of the Vendor

Schedule D – Real Property & Leases of the Vendor

Schedule E – Material Agreements of the Vendor

Schedule F – Excluded Assets

2.             PURCHASE AND SALE OF ASSETS

2.1          Subject to the terms and conditions of this Agreement, the Vendor will sell, assign and transfer to the Purchaser and the Purchaser will purchase from the Vendor the Purchased Assets free and clear of all liens, encumbrances and charges, except for the Permitted Encumbrances, on the Closing Date.

2.2          In consideration of the Purchased Assets, Dane will issue the Dane Shares to the Vendor on the Closing Date.

3.             NON-ASSUMPTION OF LIABILITIES

3.1          Except for the Permitted Encumbrances, it is understood and agreed between the parties that the Purchaser is not assuming and will not be liable or responsible for any of the liabilities, debts or obligations of the Vendor or the Business existing or accruing at the Closing Date, whether or not relating to the Business, and the Vendor will indemnify and save harmless the Purchaser, its officers, directors, employees, agents and shareholders from and against all costs, expenses, losses, claims or liabilities, including reasonable legal fees and disbursements, suffered or incurred by the Purchaser or any Persons arising out of any liabilities, debts and obligations, save and except those obligations, commitments, debts or liabilities of or claims against the Vendor specifically assumed by the Purchaser under the terms of this Agreement.

4.             SECURITIES PROVISIONS

4.1          The Vendor acknowledges and agrees that the Dane Shares will be issued by Dane to the Vendor pursuant to the exemptions from the registration requirements of the Securities Act set out in Rule 506 of Regulation D promulgated under the Securities Act, that the Dane Shares will be “restricted securities” under the Securities Act and the rules and regulations promulgated thereunder, and that any certificates representing the Dane Shares will be endorsed with a legend substantially similar to the following in accordance with Regulation D of the Securities Act:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

4.2          The Vendor agrees not to reoffer, resell, transfer or dispose the Dane Shares unless such reoffer, resale, transfer or disposition is made pursuant to an effective registration under the Securities Act and any applicable state securities laws, or pursuant to an available exemption from the registration requirements of the Securities Act, and any applicable state securities laws.  The Vendor further agrees that the Purchaser may refuse to register any resale or transfer of the Dane Shares not made pursuant to an effective registration under the Securities Act and any applicable state securities law or pursuant to an available exemption from the registration requirements of the Securities Act.

 

 

  

  

  

 

4.3          The Vendor covenants, represents and warrants to Dane as follows, and acknowledges that Dane is relying upon such covenants, representations and warranties in connection with the sale of the Dane Shares to the Vendor:

	
  

	
(a)

	
An investment in Dane’s securities is highly speculative, and the Vendor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of his investment, has such knowledge and experience in financial or business matters such that he is capable of evaluating the merits and risks of the investment in the securities of Dane.

	
  

	
(b)

	
The Vendor can bear the economic risk of an investment in the securities of Dane.

	
  

	
(c)

	
The Vendor has had full opportunity to review Dane’s filings with the SEC, including Dane’s annual reports on Form 10-K, quarterly reports on Form 10-Q, Current Reports on Form 8-K and additional information regarding the business and financial condition of Dane.  The Vendor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Dane Shares. The Vendor further represents that it has had an opportunity to ask questions and receive answers from Dane regarding the terms and conditions of the offering of the Dane Shares under this Agreement and the business, properties, prospects and financial condition of Dane.  The Vendor has had full opportunity to discuss this information with the Vendor’s legal and financial advisers prior to execution of this Agreement.

	
  

	
(d)

	
The Vendor acknowledges that it has been informed that the offering of the Dane Shares by Dane has not been reviewed by the SEC or any other regulatory body and that the Dane Shares are being issued by Dane pursuant to an exemption from registration under the Securities Act and any applicable state securities laws.

	
  

	
(e)

	
The Vendor understands that the Dane Shares will be "restricted securities" under the Securities Act and the rules and regulations promulgated thereunder as they are being acquired from Dane in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, the Vendor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act and the rules and regulations promulgated thereunder.

	
  

	
(f)

	
The Vendor acknowledges that Dane is in the early stages of development of its business and may require substantial funds in the near future in order to continue as a going concern.

	
  

	
(g)

	
The Vendor is not aware of any general solicitation or advertisement of the Dane Shares.

4.4          The Vendor acknowledges and agrees that Dane is an “OTC reporting issuer” as that term is defined in MI 51-105, and that the Dane Shares will be issued and sold pursuant to exemptions from the prospectus requirements of applicable Canadian securities laws.  The Vendor further acknowledges and agrees that the Dane Shares may not be traded in or from a jurisdiction in Canada unless such trade is made in accordance with the provisions of MI 51-105, the Vendor will, and will cause its affiliates to, comply with such conditions in  making any trade of the Dane Shares in or form a jurisdiction in Canada and Dane will refuse to register any transfer of the Dane Shares made in connection with a trade of the Dane Shares in or from a jurisdiction in Canada and not made in accordance with the provisions of MI 51-105.  Notwithstanding the generality of the foregoing, as of the date hereof, MI 51-105 generally provides that the Dane Shares may not be traded in or form a jurisdiction in Canada unless the following conditions have been met:

 

 

  

  

  

 

 

	
  

	
(a)

	
A four month period has passed from the later of (i) the date that Dane distributed the Dane Shares, and (ii) the date the Dane Shares were distributed by a control person of Dane;

	
  

	
(b)

	
If the person trading the Dane Shares is a control person of Dane, such person has held the Dane Shares for at least 6 months;

	
  

	
(c)

	
The number of Dane Shares that the person proposes to trade, plus the number of common shares of Dane that such person has traded in the preceding 12 months, does not exceed 5% of Dane’s outstanding common shares;

	
  

	
(d)

	
The trade is made through an investment dealer registered in a jurisdiction in Canada;

	
  

	
(e)

	
The investment dealer executes the trade through any of the over-the-counter markets in the United States;

	
  

	
(f)

	
There has been no unusual effort made to prepare the market or create a demand for the Dane Shares;

	
  

	
(g)

	
No extraordinary commission or other consideration is paid to a person for the trade;

	
  

	
(h)

	
If the person trading the Dane Shares is an insider of Dane, the person reasonably believes that Dane is not in default of securities legislation; and

	
  

	
(i)

	
All certificates representing the Dane Shares bear the Canadian restrictive legend set out in Section 13(1) of MI 51-105.

4.5          As of the date hereof, the Vendor represents and warrants to Dane that it does not presently intend to trade the Dane Shares in or from a jurisdiction in Canada.  If, after the date hereof, the Vendor does not trade the Dane Shares in or from a jurisdiction in Canada, it will, prior to any such trade, and in addition to complying with the provisions of section 4.4 of this Agreement, re-submit all certificates representing the Dane Shares to the Vendor for purposes of having the legend set out in Section 13(1) of MI 51-105 endorsed on such certificates.

5.             CANCELLATION OF PRINCIPAL SHARES

5.1          The Principal Shareholder will surrender to Dane 49,800,000 shares of Dane’s common stock held by the Principal Shareholder for cancellation on the Closing Date.

5.2          The Principal Shareholder acknowledges that:

	
  

	
(a)

	
the surrender of the 49,800,000 shares is for no valuation consideration; and

	
  

	
(b)

	
the Purchaser, Dane and the Vendor are relying on such surrender in entering into this Agreement and the transaction contemplated therein.

 

6.            REPRESENTATIONS AND WARRANTIES OF THE VENDOR

6.1         The Vendor represents and warrants to the Purchaser, Dane and the Principal Shareholder as follows, and acknowledges that the Purchaser, Dane and the Principal Shareholder are relying upon such representations and warranties in connection with the execution of this Agreement:

	
  

	
(a)

	
The Vendor has been duly incorporated and organized, is validly existing and is in good standing under the laws of the state of Nevada, and has the corporate power to own or lease its property and to carry on its Business.

 

 

  

  

  

 

 

	
  

	
(b)

	
The Vendor has all necessary corporate power, authority and capacity to own the Purchased Assets and to carry on the Business as presently conducted and is in good standing each jurisdiction in which the nature of the Business or the Purchase Assets makes qualification necessary.

	
  

	
(c)

	
The Vendor has all necessary corporate power, authority and capacity to enter into this Agreement and to carry out its obligations under this Agreement; the execution and delivery of this Agreement and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the party of the Vendor.

	
  

	
(d)

	
The Purchased Assets do not constitute all of the property and assets of the Vendor, including goodwill and corporate franchises, within the meaning contemplated by NRS 78.565, and that the Excluded Assets constitute real, valuable and substantive assets of the Vendor.

	
  

	
(e)

	
With the exception of the Permitted Encumbrances, the Purchased Assets are owned by the Vendor as the legal and beneficial owner with good and marketable title thereto, free and clear of all mortgages, liens, charges, security interests, adverse claims, pledges, encumbrances and demands whatsoever with the sole and exclusive right to use the same.  All intellectual property is in good standing and duly registered in all appropriate offices where required to preserve the rights and interests thereto.  The Vendor has no knowledge of any claim or adverse ownership to infringe, oppose or conflict with any of the intellectual property.  The conduct of the Business does not infringe on the patents, trademarks or copyrights, domestic or foreign, of any other person, firm or entity.

	
  

	
(f)

	
The Vendor has no indebtedness to any person, firm or corporation which is capable by operation of law, instrument or otherwise now or hereafter of constituting a lien, charge, security interest or encumbrance against any of the Purchased Assets, or to which the Purchaser may become liable on or after the consummation of the transactions contemplated herein, except for the Permitted Encumbrances.

	
  

	
(g)

	
The books and records of the Vendor fairly and correctly set out and disclose in all material respects, in accordance with generally accepted accounting principles, the financial position of the Vendor as at the date hereof, and all material financial transactions of the Vendor relating to the Business have been accurately recorded in such books and records.

	
  

	
(h)

	
The Vendor Financial Statements present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and the financial condition of the Vendor as at the date thereof and there will not be, prior to the Closing Date, any material increase in the liabilities of the Vendor other than increases arising as a result of carrying on the Business in the ordinary and normal course.  Since the date of the Vendor Financial Statements, there has been no event, occurrence or development that has had or that could reasonably be expected to have a material adverse effect on the Business or the Purchased Assets.

	
  

	
(i)

	
The entering into this Agreement and the consummation of the transactions contemplated hereby will not result in the violation of any term or provision of any instrument or agreement, written or oral, to which the Vendor may be a party, and will not, to the best of the knowledge of the Vendor, result in the violation of any law or regulation of the United States or of any statements in which it is resident or in which the Business is or at the Closing Date will be carried on or of any local laws, municipal bylaws or ordinances to which the Vendor or the Business may be subject.

	
  

	
(j)

	
There are no actions, suits or proceedings pending or threatened against or affecting the Vendor or affecting the Purchased Assets, at law or in equity, or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign and the Vendor is not aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success.

 

 

  

  

  

 

 

	
  

	
(k)

	
No person other than the Vendor has any beneficial or legal interest in the Purchased Assets, with the exception of the Permitted Encumbrances.

	
  

	
(l)

	
The Purchased Assets are in good operating condition and are in a state of good repair and maintenance.

	
  

	
(m)

	
The Vendor does not have any outstanding material agreements, contracts or commitments, whether written or oral, of any nature or kind whatsoever, including, but not limited to, employment, service, consulting or pension agreements, other than those agreements set forth in the Vendor’s filings with the SEC.

	
  

	
(n)

	
The Vendor has the right to use all of the intellectual property necessary to conduct the Business, including, but not limited to, the patents, trademarks, trade names and copyrights both domestic and foreign, set out in the Schedules hereto.

	
  

	
(o)

	
The Vendor has made full disclosure to the Purchaser of all aspects of the Business and has made all of its books and records available to the representatives of the Purchaser in order to assist the Purchaser in the performance of its due diligence searches and no material facts in relation to the Purchased Assets have been concealed by the Vendor.

6.2          The Vendor acknowledges and agrees that the Purchaser, Dane and the Principal Shareholder has entered into this Agreement relying on the warranties and representations and other terms and conditions of this Agreement notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Purchaser, Dane and the Principal Shareholder and that no information which is now known or should be known or which may hereafter become known to the Purchaser, Dane and the Principal Shareholder or their respective officers, directors or professional advisors will limit or extinguish the right to indemnify hereunder.

 

7.             REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND DANE

7.1          The Purchaser and Dane represent and warrant to the Vendor and acknowledges that the Vendor is relying upon such representations and warranties in entering into this agreement:

	
  

	
(a)

	
The Purchaser has been duly incorporated and organized, is validly existing and is in good standing under the laws of the state of Nevada, and has the corporate power to own or lease its property and to carry on its business.

	
  

	
(b)

	
Dane has been duly incorporated and organized, is validly existing and is in good standing under the laws of the state of Nevada, and has the corporate power to own or lease its property and to carry on its business.

	
  

	
(c)

	
The authorized capital of Dane consists of 250,000,000 shares of common stock, with a par value of $0.001 per share, of which 53,600,000 shares of common stock are currently issued and outstanding as fully paid and non-assessable shares.

	
  

	
(d)

	
No person, firm or corporation has any agreement or option, including convertible securities, warrants or convertible obligations of any nature, or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase, subscription, allotment or issuance of any of the unissued shares in the capital of Dane.

	
  

	
(e)

	
The directors of the Purchaser are:

 

	 	Name 	 	Position
	 	David Christie 	 	Director, President, Secretary and Treasurer

 

 

  

  

  

 

 

	
  

	
(f)

	
The directors of Dane are:

 

	 	Name 	 	Position
	 	
David Christie

	 	
Director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer

 

	
  

	
(g)

	
The Dane Financial Statements present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and the financial condition of Dane as at the date thereof.

	
  

	
(h)

	
There have been no material adverse changes in the financial position or condition of Dane or damage, loss or destruction materially affecting the business or property of Dane from the date of the Dane Financial Statements to the Closing Date except as may be disclosed by Dane in Current Reports on Form 8-K filed with the SEC.

	
  

	
(i)

	
Dane and the Purchaser have made full disclosure to the Vendor of all material aspects of Dane and the Purchaser’s business and has made all of its books and records available to the representatives of the Vendor in order to assist the Vendor in the performance of its due diligence searches and no material facts in relation to Dane and the Purchaser’s business have been concealed by Dane and the Purchaser.

	
  

	
(j)

	
Neither Dane nor the Purchaser is a party to or bound by any agreement or guarantee, warranty, indemnification, assumption or endorsement or any other like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other person, firm or corporation.

	
  

	
(k)

	
There are no actions, suits or proceedings (whether or not purportedly on behalf of Dane or the Purchaser), pending or threatened against or affecting Dane, the Purchaser or their business, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign and Dane and the Purchaser are not aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success.

	
  

	
(l)

	
Dane’s shares of common stock are quoted on the FINRA OTC Bulletin Board and the OTC Markets QB and Dane is not in breach of any regulation, by-law or policy of, or any of the terms and conditions of its quotation on the FINRA OTC Bulletin Board or the OTC Markets QB applicable to Dane or its operations.

	
  

	
(m)

	
Neither Dane nor the Purchaser currently have any employees and is not party to any collective agreements with any labour unions or other association of employees.

	
  

	
(n)

	
The entering into this Agreement and the consummation of the transactions contemplated hereby will not result in the violation of any term or provision of the articles of incorporation or bylaws of the Purchaser and Dane or of any indenture, instrument or agreement, written or oral, to which the Purchaser and Dane may be a party.

	
  

	
(o)

	
There are no actions, suits or proceedings pending or threatened against or affecting the Purchaser and Dane, at law or in equity, or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign and the Purchaser and Dane are not aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success.

 

 

  

  

  

 

 

7.2          The Purchaser and Dane acknowledge and agree that the Vendor has entered into this Agreement relying on the warranties and representations and other terms and conditions of this Agreement notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Vendor and that no information which is now known or should be known or which may hereafter become known to the Vendor or its respective officers, directors or professional advisors will limit or extinguish the right to indemnify hereunder.

 

8.             REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDER

8.1          The Principal Shareholder represents and warrants to the Vendor and acknowledges that the Vendor is relying upon such representations and warranties in entering into this agreement:

	
  

	
(a)

	
The Principal Shares are owned by the Principal Shareholder as the beneficial and recorded owner with good and marketable title thereto, free and clear of all mortgages, liens, charges, security interests, adverse claims, pledges, encumbrances and demands whatsoever.

	
  

	
(b)

	
The entering into this Agreement and the consummation of the transactions contemplated hereby will not result in the violation of any term or provision of the articles of incorporation or bylaws of the Principal Shareholder or of any indenture, instrument or agreement, written or oral, to which the Principal Shareholder may be a party.

	
  

	
(c)

	
There are no actions, suits or proceedings pending or threatened against or affecting the Principal Shareholder, at law or in equity, or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign and the Principal Shareholder are not aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success.

8.2          The Principal Shareholder acknowledges that he has been advised to obtain independent legal advice.

9.              ACTS IN CONTEMPLATION OF CLOSING

9.1          The Vendor covenants and agrees with Dane, the Purchaser and the Principal Shareholder to, prior to or on the Closing Date, deliver to Dane and the Purchaser those audited and unaudited financial statements of the Vendor as are required by Rule 3-05, Rule 8-04 and Article 11 of Regulation S-X, as applicable, of the SEC in order to permit Dane to make the SEC filings required in respect of the acquisition of the Purchased Assets in accordance with this Agreement, including, but not limited to, annual financial statements for the year ended December 31, 2012, prepared in accordance with United States Generally Accepted Accounting Procedures (“US GAAP”) and audited in accordance with PCAOB audit standards, and unaudited interim financial statements for the period ended September 30, 2013, prepared in accordance with US GAAP.

9.2          The Vendor will assist Dane in preparing an information statement required under Rule 502 of Regulation D and will provide such information relating to the Vendor as may be necessary.

9.3          Dane will take such steps as may be necessary, including the filing of an information statement pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, to effect the following changes in the officers and directors of Dane.

 

	 	Name 	 	Position
	 	

G. Dale Murray II

	 	

Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer & Director

 

10.            CLOSING CONDITIONS

10.1         The obligation of the Purchaser and Dane to complete the purchase of the Purchased Assets will be subject to the fulfilment or satisfaction of, or compliance with, on or before the Closing Date, each of the following conditions precedent:

 

 

  

  

  

 

 

	
  

	
(a)

	
All of the representations and warranties of the Vendor made in or pursuant to this Agreement including, without limitation, the representations and warranties made by the Vendor set forth in section 6.1, will be true and correct in all material respects at the Closing and with the same effect as if made at and as of Closing.

	
  

	
(b)

	
At the Closing Date, there will have been no materially adverse change in the status or condition of the Purchased Assets that could have a materially adverse affect on the Purchased Assets or upon the Vendor’s ability to transfer and sell the same to the Purchaser on the terms and conditions set out in this Agreement.

10.2        In the event any of the foregoing conditions contained in Section 10.1 hereof are not fulfilled or performed at or before the Closing Date to the reasonable satisfaction of the Purchaser, Dane and the Principal Shareholder, the Purchaser, Dane and the Principal Shareholder may terminate this Agreement by written notice to the Vendor and in such event the Purchaser will be released from all further obligations hereunder but any of such conditions may be waived in writing in whole or in part by the Purchaser, Dane and the Principal Shareholder without prejudice to its rights of termination in the event of the non-fulfilment of any other conditions.

10.3        The obligation of the Vendor to complete the sale of the Purchased Assets will be subject to the fulfilment or satisfaction of, or compliance with, on or before the Closing Date, the following condition precedent:

	
  

	
(a)

	
All of the representations and warranties of the Purchaser and Dane made in or pursuant to this Agreement including, without limitation, the representations and warranties made by the Purchaser and Dane set forth in paragraph 7.1, will be true and correct in all material respects at the Closing and with the same effect as if made at and as of Closing.

	
  

	
(b)

	
At the Closing Date there will have been no materially adverse change in the affairs, assets, liabilities, financial condition or business (financial or otherwise) of Dane and the Purchaser from that shown on or reflected in the Dane Financial Statements.

	
  

	
(c)

	
Dane will have made the Schedule 14F-1 Information Statement filing as required under paragraph 9.2.

10.4        In the event that the foregoing conditions contained in Section 10.3 hereof are not fulfilled or performed at or before the Closing Date to the reasonable satisfaction of the Vendor, the Vendor will have all the rights and privileges granted to the Purchaser under Section 10.2, mutatis mutandis.

11.           CLOSING ARRANGEMENTS

11.1        The closing will take place on the Closing Date at the offices of the Purchaser's solicitors (the "Closing").

11.2        On the Closing Date, the Vendor will deliver to the Purchaser and Dane:

	
  

	
(a)

	
a general conveyance of the Purchased Assets to the Purchaser and all other deeds of conveyance, bills of sale, transfer and assignments, duly executed, in form and content satisfactory to the Purchaser's solicitors appropriate to effectively vest good and marketable title to the Purchased Assets into the name of the Purchaser free and clear of all encumbrances, with the exception of the Permitted Encumbrances, and immediately registerable in all places where registration is necessary or desirable to effect the valid transfer of the Business and the Purchased Assets to the Purchaser; and

	
  

	
(b)

	
possession of the Purchased Assets.

 

 

  

  

  

 

11.3        On the Closing Date, the Purchaser and Dane will deliver to the Vendor the following:

	
  

	
(a)

	
certificates representing the Dane Shares duly endorsed with legends, acceptable to Dane's counsel, respecting restrictions on transfer as required by or necessary under the applicable securities legislation of the United States or any state; and

	
  

	
(b)

	
sequential resignations and directors resolutions such that the following will have been appointed directors and/or officers of Dane immediately following closing:

	 	
Name

	 	
Position

	 	
George Dale Murray II

	 	
Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer & Director

11.4        On the Closing Date, the Principal Shareholder will surrender to Dane the certificates representing 49,800,000 of the Principal Shares duly endorsed in blank for transfer or with a stock power of attorney (in either case with the signature guaranteed by the appropriate official) for cancellation.

11.5        Following the Closing Date Dane will make all required filings and pay all required fees required for “OTC reporting issuers” under MI 51-105.

12.           INDEMNIFICATION

12.1        The Vendor will indemnify and save harmless the Purchaser and Dane from and against any and all losses, claims, damages (including lost profits, consequential damages, interest, penalties, fines and monetary sanctions), liabilities and costs incurred or suffered by the Purchaser and Dane by reason of, or resulting from, in connection with or arising in any manner whatsoever out of the breach of any warranty or the inaccuracy of any representation of the Vendor contained or referred to in this Agreement or in any agreement, instrument or document delivered by or on behalf of the Vendor in connection with this Agreement.

12.2        The Purchaser and Dane will indemnify and save harmless the Vendor from and against any and all losses, claims, damages (including lost profits, consequential damages, interest, penalties, fines and monetary sanctions), liabilities and costs incurred or suffered by the Vendor by reason of, or resulting from, in connection with or arising in any manner whatsoever out of the breach of any warranty or the inaccuracy of any representation of the Purchaser and Dane contained or referred to in this Agreement or in any agreement, instrument or document delivered by or on behalf of the Purchaser in connection with this Agreement.

13.           GENERAL PROVISIONS

13.1        Time will be of the essence of this Agreement.

13.2        The parties will execute and deliver such further documents and instruments and do all such acts and things as may be reasonably necessary or requisite to carry out the full intent and meaning of this Agreement and to effect the transactions contemplated by this Agreement.

13.3        This Agreement will enure to the benefit of and be binding upon the Vendor, the Purchaser and Dane and, as applicable, their heirs, executors, administrators, successors and assigns.

13.4        This Agreement contains the whole agreement between the parties hereto in respect of the subject matter of this Agreement and there are no warranties, representations, terms, conditions or collateral agreements expressed, implied or statutory, other than as expressly set forth in this Agreement.

13.5        Any notice to be given under this Agreement will be duly and properly given if made in writing and by delivering or faxing the same to the addressee at the address as set out on page one of this Agreement.  Any notice given as aforesaid will be deemed to have been given or made on, if delivered, the date on which it was delivered or, if facsimile, on the next business day after it was facsimiled.  Any party hereto may change its address for notice from time to time by notice given to the other parties hereto in accordance with the foregoing.

 

 

  

  

  

 

 

13.6        If any provision of this Agreement will be invalid, illegal or unenforceable in any respect under any applicable law, such provision may be severed from this Agreement, and the validity, legality and enforceability of the remaining provisions hereof will not be affected or impaired by reasons thereof.

13.7         This Agreement will be construed and enforced in accordance with, and the rights of the parties will be governed by, the laws of the state of Nevada.

-THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

13.8        This Agreement may be executed in one or more counter-parts, each of which so executed will constitute an original and all of which together will constitute one and the same agreement.

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

DANE ACQUISITION CORP.

a Nevada corporation

by its authorized signatory:

/s/ David Christie

_____________________________

David Christie, CEO

DANE EXPLORATION INC.

a Nevada corporation

by its authorized signatory:

/s/ David Christie

_____________________________

David Christie, CEO

PORTUS HOLDINGS INC.

a Nevada corporation

by its authorized signatory:

/s/ G. Dale Murray, II

_____________________________

G. Dale Murray, II, CEO

SIGNED, SEALED AND DELIVERED

BY DAVID CHRISTIE

in the presence of:

 

 

	/s/ James Christie 

______________________________

	/s/ David Christie 

_____________________________

	Signature	
DAVID CHRISTIE

	 	 

James Christie

Name

#208 – 7240 Lindsay Road

Address

Richmond, British Columbia

 

  

  

  

 

 

SCHEDULE A

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

LIST OF ASSETS AND INTELLECTUAL PROPERTY

	
1.

	
Purchased Assets

The Purchased Assets include all assets, designs, schematics, business models, servers, contracts to use cloud servers, software and websites in order to implement the Business.

	
2.

	
Intellectual Property and Business Model

The business model and Intellectual Property comprising the Purchased Assets include, but not limited to:

 

	
1.

	
 
Design of the cloud based integration of the food service supply chain;

	
2.

	
Alternative value concept for pricing in comparison to current market;

	
3.

	
Conceptual design for a multi-lingual cloud based translator (possibly patentable);

	
4.

	
Information standardization using GS-1 for proposed food driven bar code system;

	
5.

	
Potential to supply and maintain database for GS-1;

	
6.

	
Design of a local growers network to add to the supply chain;

	
7.

	
Design model for Data as a Service specific to food service supply chain; and

	
8.

	
Design model for Analytics as a Service specific to food service supply chain.

	
3.

	
Websites

The website(s) that comprise the Purchased assets include, but are not limited to:

www.portus-inc.com

and such other websites in order for the Purchaser to implement the Business.

 

 

 

 

 

 

 

 

 

 

  

  

  

 

SCHEDULE B

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

PERMITTED ENCUMBRANCES

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

SCHEDULE C

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

EMPLOYMENT, SERVICE & PENSION AGREEMENTS OF THE VENDOR

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

SCHEDULE D

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

REAL PROPERTY & LEASES OF THE VENDOR

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

SCHEDULE E

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

LIST OF MATERIAL CONTRACTS

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

SCHEDULE F

 

to that Asset Purchase Agreement dated as of the 29th day of January, 2014

 

EXCLUDED ASSETS

	
1.

	
Share Exchange Agreement dated October 12, 2012 among Portus Holdings Inc., Portus Acquisition Corp. and SureQuest Systems, Inc.

	
2.

	
Service Licensing Agreement dated February 8, 2013 between Portus Holdings Inc. and SureQuest Systems, Inc.EXHIBIT 10.1

 

LETTER LOAN AGREEMENT

January 28, 2014

SHARPS COMPLIANCE, INC. OF TEXAS

9220 Kirby Drive, Suite 500

Houston, Texas 77054

Attn:  Diana Precht Diaz, VP/CFO

Dear Ms. Diaz:

Pursuant to our prior discussions, this Letter Loan Agreement (the "Loan Agreement") will serve to set forth the terms of the financing agreement by and between SHARPS COMPLIANCE, INC. OF TEXAS, a Texas corporation (the "Borrower") and [REDACTED], a [REDACTED] state chartered bank  (the "Lender"):

1.                   Loan.  Subject to the terms and conditions set forth in this Loan Agreement and the other agreements, instruments, and documents executed and delivered in connection herewith and pursuant hereto (collectively, together with this Loan Agreement, referred to hereinafter as the "Loan Documents"):

(a)                 Borrowing Base Loan.  Lender agrees to lend to Borrower, and Borrower may borrow from Lender, from time to time, an amount (the "Borrowing Base") equal to the sum of (i) 80% of the net amount of Eligible Accounts (as defined below), plus (ii) 50% of the net amount of Eligible Inventory (as defined below) up to a maximum of up to a maximum of 50% of the outstanding balance of the Borrowing Base; provided, however, the total of such loan  shall not exceed in the aggregate at any one time $3,000,000.00 (the "Loan").  The Loan proceeds will be used by Borrower solely (a) to pay off Borrower's current lender, (b) to fund working capital requirements, (iii) to issue letters of credit, and (iv) for other general corporate purposes.  In the event that, at any time, the aggregate amount of indebtedness outstanding shall exceed the Borrowing Base, Borrower agrees to immediately repay to Lender the amount necessary to cause the outstanding balance of the Loan to be no more than the Borrowing Base.  Provided that Borrower shall comply with the covenants contained in this Loan Agreement and the other Loan Documents, the Loan shall be extended to Borrower until 2 years from the date of this Loan Agreement (the "Termination Date"), at which time all sums advanced hereunder shall be due and payable in full.  Within the limits of this paragraph, Borrower may borrow, repay, and reborrow hereunder in accordance with the terms of this Loan Agreement.  Borrower shall give Lender not less than 2 business days prior notice of each requested advance hereunder, specifying (i) the aggregate amount of such requested advance, and (ii) the requested date of such advance.

(b)                Letter(s) of Credit.  Provided that there is not an uncured Event of Default (as defined below), at the written request of Borrower, Lender shall issue irrevocable commercial or standby letter(s) of credit (the "Letter(s) of Credit"), for the account of Borrower, subject to the following conditions:

(i)             The aggregate face amount of all outstanding Letters of Credit shall not exceed at any one time $500,000.00.

(ii)            The aggregate face amount of all outstanding Letters of Credit (including the amount of the requested Letter of Credit), plus the outstanding balance of the Loan, shall not exceed the lesser of (a) the Borrowing Base, or (b) the principal amount of the Loan.

Page 2

(iii)            Each Letter of Credit shall have a minimum face amount of $10,000.00 and a maximum face amount of $350,000.00.

(iv)            The expiration date of the requested Letter of Credit shall (a) not exceed 2 years, and (b) be no later than 30 days prior to the Termination Date.  In the event there is an outstanding Letter of Credit on the Termination Date, Borrower shall either cash secure the amount of the Letter of Credit obligation, or Lender shall retain its lien on the Collateral.

(v)             Borrower shall have executed and delivered to Lender a letter of credit application and all other documents required by Lender in connection with the issuance of the Letter of Credit, each of which shall be in form and substance satisfactory to Lender in its sole discretion.

Without limiting any of the foregoing, if, in any case, Borrower does not provide Lender with funds in the amount and on the date necessary to settle Lender's obligation under any draft drawn under any Letter of Credit, Lender shall make, and Borrower shall accept, an advance by Lender to Borrower under the Borrowing Base Loan and this Loan Agreement as of the day and time such drafts are paid by Lender and in the amount of the drafts so paid.  In case of any conflict between the terms of any letter of credit application with respect to any Letter of Credit and the terms hereof, the terms of this Loan Agreement shall control, except to the extent the letter of credit application states that certain specified provisions thereof control, in which case those specified provisions of the letter of credit application shall control.

As used in this Loan Agreement, the term "Eligible Accounts" shall mean an amount equal to the aggregate net invoice or ledger amount owing on all trade accounts receivable for goods sold or leased or services rendered in the ordinary course of business, upon which Borrower's right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever and in which Lender has a perfected, first priority lien, after deducting (without duplication):  (a) each such account that is unpaid 90 days or more after the original invoice date thereof, (b) any account which by its terms is payable more than 60 days from the invoice date, (c) the amount of all returns, discounts, allowances, rebates, credits and adjustments to such accounts, (d) that portion of any account which constitutes a pre-billing or a "billed and hold," or a credit memo balance, service charge, or finance charge, together with the amount of all contra accounts or accounts subject to setoffs, claims, defenses, disputes, or counterclaims asserted by or available to the account debtors, (e) all accounts with respect to which goods have not been delivered are placed on consignment, or subject to a guaranteed sale or other terms by reason of which payment by the account debtor may be conditional, (f) that portion of any account which represents interim or progress billings, all accounts with respect to which a payment and/or performance bond has been furnished, and that portion of any accounts billed for or representing retainage, if any, until all prerequisites to the immediate payment of such accounts have been satisfied, (g) all accounts owing by account debtors for which there has been instituted a proceeding in bankruptcy or reorganization under the United States Bankruptcy Code or other law, whether state or federal, now or hereafter existing for relief of debtors, (h) all accounts owing by affiliates, subsidiaries, or employees, (i) any account that is owed by an account debtor which is a creditor or supplier of Borrower, (j) all accounts in which the account debtor is any state or municipal government, a Native American sovereign nation, the United States government, or any department, agency, or instrumentality of the United States, except to the extent an acknowledgment of assignment to Lender of such account in compliance with the Federal Assignment of Claims Act and other applicable laws has been received by Lender, (k) all accounts due by any account debtor whose principal place of business is located outside the United States of America and its territories, unless covered by credit insurance or a letter of credit acceptable to Lender, (l) all accounts subject to any provisions prohibiting assignment or requiring notice of or consent to such assignment, (m) that portion of all account balances owing by any single account debtor which exceeds 20% % of the aggregate of all accounts owing by all account debtors, provided, however, Lender will allow a 30% concentration limit for [REDACTED], and (n) any other accounts deemed unacceptable by Lender in its reasonable discretion; provided, however, if more than 20% of the then balance owing by any single account debtor does not qualify as an Eligible Account under the foregoing provisions, then the aggregate amount of all accounts owing by such account debtor shall be excluded from Eligible Accounts.

Page 3

As used in this Loan Agreement, the term "Eligible Inventory" shall mean the aggregate value of all inventory of raw materials and finished goods (excluding work-in-process and packaging materials, supplies and any advertising costs capitalized into inventory) then owned by, and in the possession or under the control of, Borrower and held for sale or disposition in the ordinary course of business, in which Lender has a perfected, first priority lien.  For purposes of this definition, Eligible Inventory shall be valued at the lower of cost (excluding the cost of labor) or market value, in each case on a first-in first-out basis.   Eligible Inventory shall not include (a) inventory which is damaged, defective, obsolete, or otherwise unsaleable in the ordinary course of Borrower's business, (b) inventory which has been returned or rejected, (c) inventory that has been shipped or delivered to a customer on consignment, on a sale or return basis or on the basis of any similar understanding, including in transit inventory held by a common carrier, (d) inventory with respect to which a claim exists disputing Borrower's title to or right to possession of such inventory, (e) inventory that is not in good condition or does not comply with applicable laws, rules, or regulations or the standards imposed by any governmental authority with respect to its manufacture, use or sale, (f) inventory which is not subject to a first priority lien in favor of Lender or is subject to a lien in favor of any other person, including, but not limited to, an unsubordinated landlord's or warehouseman's lien, and (g) inventory that Lender, in its reasonable discretion, has determined to be unmarketable.

2.                   Promissory Note.  The Loan shall be evidenced by a Revolving Line of Credit Promissory Note (herein called, together with any renewals, extensions and increases thereof, the "Note"), duly executed by Borrower, in the original principal amount of $3,000,000.00, and in form and substance acceptable to Lender.  Interest on the Note shall accrue at the rate set forth therein.  The principal of and interest on the Note shall be due and payable in accordance with the terms and conditions set forth in the Note and in this Loan Agreement.

3.                  Collateral.  As collateral and security for the Loan, and any and all other indebtedness or obligations from time to time owing by Borrower to Lender, Borrower shall grant, or cause the owner thereof to grant, to Lender, its successors and assigns, a lien and security interest (which shall be a first and prior lien and security interest therein), in and to all present and future Accounts and Inventory (each as defined in the Texas Business & Commerce Code) of Borrower, together with any and all products and proceeds thereof (collectively, the "Collateral").

4.                  [Reserved]

Page 4

5.                   Lender Fee(s).

(a)                 Lender shall be entitled to a non-use fee payable quarterly in arrears, calculated at the rate of 0.25% per annum, computed on the basis of a 360 day year on the average daily unused amount of the Loan.  The amount accrued for any quarter shall be due and payable within 15 days of the issuance by Lender of an invoice therefor.

(b)                 In the event Lender issues a Letter of Credit, Borrower will pay to Lender a fee of 1.50% of the amount of the Letter of Credit and such other administrative fee as customarily charged by Lender upon the issuance of each Letter of Credit, and a renewal fee of 1.50% on the anniversary date thereof if such Letter of Credit remains outstanding.

6.                  Closing Documents.  Prior to or contemporaneously with the closing of the Loan, Borrower shall deliver, or cause to be delivered, to Lender, in addition to this Loan Agreement and the Note, the following agreements, documents, and instruments, each in the form required by Lender:

(a)                 Security Agreement covering the Collateral.

(b)                 UCC-1 Financing Statements covering the Collateral.

(c)                 Resolutions of Borrower authorizing Borrower to enter into the transactions contemplated under this Loan Agreement and the other Loan Documents.

(d)                 Such other agreements, instruments, documents, and certificates as may be requested by Lender to evidence the Loan and to grant and perfect a lien and security interest in the Collateral.

7.                  Representations and Warranties.  Borrower represents and warrants as follows:

(a)                 Existence.  Borrower is a corporation duly organized, validly existing, and is in good standing under the laws of the state of its formation and all other states where it is doing business.

(b)                Authorization.  The execution, delivery, and performance of this Loan Agreement and all of the other Loan Documents and the consummation of the transactions contemplated by the Loan Documents (i) have been duly authorized, (ii) constitute legal, valid, and binding obligations, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and except to the extent specific remedies may generally be limited by equitable principles, and (iii) do not (a) conflict with, result in a violation of, or constitute a default under (1) any provision of Borrower's governing documents, any other agreement or instrument binding on Borrower, or (2) any law, governmental regulation, court decree, or order applicable to Borrower, or (b) require the consent, approval, or authorization of any third party.

(c)                 Financial Condition.  Each financial statement supplied to Lender was prepared in accordance with generally accepted accounting principles, consistently applied, in effect on the date such statements were prepared and truly discloses and fairly presents the financial condition as of the date of each such statement, and there has been no material adverse change in such financial condition or results of operations subsequent to the date of the most recent financial statement supplied to Lender.

Page 5

(d)                 Litigation.  There are no actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the properties of Borrower, before any court or governmental department, commission or board, which, if determined adversely to Borrower, (i) would subject Borrower to any liability not fully covered by insurance, or (ii) would have a material adverse effect on the financial condition, properties, or operations of Borrower, or its ability to perform its obligations under this Loan Agreement.

(e)                 Tax Returns.  Borrower has filed all federal, state, and local tax reports and returns, if any, required by any law or regulation to be filed by it and has either duly paid all taxes, duties, and charges, if any, indicated due on the basis of such returns and reports, except those being contested in good faith by appropriate proceeding, or made adequate provision for the payment thereof, and the assessment of any material amount of additional taxes in excess of those paid and reported is not reasonably expected.

(f)                 No Material Changes.  There is no fact known that has not been disclosed to Lender in writing which may result in any material adverse change in Borrower's business, properties or operations.  No certificate or statement herewith or heretofore delivered to Lender in connection herewith, or in connection with any transaction contemplated hereby, contains any untrue statement of a material fact or fails to state any material fact necessary to keep the statements contained therein from being misleading.  Borrower is not in default and no event or circumstance has occurred which, except for the passage of time or the giving of notice, or both, would constitute a default under any loan or credit agreement, mortgage, deed of trust, security agreement or other agreement or instrument.  Since the date of the last financial statements delivered to Lender, neither the business nor the assets or properties of Borrower have been materially and adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition, or taking of property or cancellation of contracts, permits or concessions by any domestic or foreign government or any agency thereof or by acts of God.

(g)                 Ownership of Assets.  Borrower owns all of the assets reflected on its most recent balance sheet free and clear of all liens, security interests or other encumbrances, except as previously disclosed in writing to Lender.

(h)                Governmental Authority.  Borrower, (i) is not in violation of any law, judgment, decree, order, ordinance, or governmental rule or regulation, or (ii) has not failed to obtain any license, permit, franchise or other governmental authorization necessary to the ownership of any assets or properties or the conduct of business.

(i)                   Principal Office.  The principal office of Borrower, as well as the place at which Borrower keeps its books and records, is the address set forth above.

8.                 Representation in Request for Advance.  Each request for an advance hereunder shall constitute a representation and warranty by Borrower that, as of the date of such request, (i) all of the representations and warranties of Borrower contained in this Loan Agreement and the other Loan Documents are true and correct, and (ii) no event has occurred and is continuing, or would result from the requested advance, which constitutes an Event of Default under any of the Loan Documents.  All representations and warranties made by Borrower in this Loan Agreement shall survive delivery of the Loan Documents and the making of the Loan.

Page 6

9.                 Conditions Precedent to the Loan.  Any obligation of Lender to make the Loan shall be subject to the complete and continuing satisfaction, on or before the date hereof, of the following conditions precedent:

(a)                 Loan Documents.  Borrower and any other person or entity required to do so shall have executed and delivered to Lender the Loan Documents to which they are a party and any and all other documents reasonably required or requested by Lender to give effect to the transactions contemplated by this Loan Agreement, all in form and substance satisfactory to Lender and its counsel.

(b)                 Additional Agreements.  Lender shall have received such other agreements, instruments, documents, and certificates incidental and appropriate to the transaction provided for herein as Lender or its counsel may reasonably request.

10.               Conditions Precedent to Future Advances.  Lender's obligation to make any advance under this Loan Agreement and other Loan Documents shall be, in addition to the conditions precedent set forth in paragraph 9 hereof, subject to the additional  conditions precedent that, as of the date of such advance and after giving effect thereto:

(a)                 Representations and Warranties.  The representations and warranties made in this Loan Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of the advance with the same effect as if made on such date (except for such representations and warranties which expressly relate to an earlier date).

(b)                No Events of Default.  There shall be no uncured Event of Default under this Loan Agreement or the Loan Documents.

 

(c)                 Request for Advance.  Lender has received a request for advance from Borrower, such request to be in the form of Exhibit "A" or a form acceptable to Lender.

(d)                Letter(s) of Credit.  In the event Borrower has requested the issuance of either a Standby or Commercial Letter of Credit, the Letter of Credit shall be subject to such terms and conditions as Lender may reasonably require, and Borrower shall have executed and delivered to Lender a letter of credit application and all other documents required by Lender in connection with the issuance of the Letter of Credit, each of which shall be in form and substance satisfactory to Lender in its sole discretion.

11.                Affirmative Covenants.  Until the Loan and all other obligations and liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and satisfied, Borrower agrees and covenants that it will, unless Lender shall otherwise consent in writing:

(a)                 Books and Records.  Borrower shall maintain its books and records in accordance with generally accepted accounting principles, applied on a consistent basis, and permit Lender to examine, audit, and make and take away copies or reproductions, at all reasonable times.

(b)                Payments of Obligations.  Borrower shall pay and discharge when due all of its indebtedness and obligations, including without limitation, all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits; provided, however, Borrower will not be required to pay and discharge any such assessment, tax charge, levy, lien or claim as long as (i) the legality of the same shall be contested in good faith by appropriate judicial, administrative or other legal proceedings, and (ii) Borrower shall have established on its books adequate reserves with respect to such contested assessment, tax, charge, levy, lien or claim in accordance with generally accepted accounting principles, consistently applied.

Page 7

(c)                 Compliance with Laws.  Borrower shall conduct its business in an orderly and efficient manner consistent with good business practices, and perform and comply with all statutes, rules, regulations and/or ordinances imposed by any governmental unit upon Borrower and its businesses and operations.

(d)                Insurance.  Borrower shall maintain insurance, including but not limited to, fire insurance, commercial property damage, public liability, worker's compensation, business interruption, and other insurance necessary or required by Lender.  Upon request of Lender, Borrower will furnish or cause to be furnished to Lender from time to time a summary of the respective insurance coverage of Borrower in form and substance satisfactory to Lender and if requested will furnish Lender with copies of the applicable policies.

(e)                 Right of Inspection; Field Audit.  Borrower shall permit such persons as Lender may designate to visit its properties and installations and examine, make, and take away copies of its books and records, as Lender may reasonably desire, including an annual field audit to be conducted at Borrower's expense (not to exceed $2,500.00) as Lender deems necessary.

(f)                  Cure of Defect.  Borrower shall promptly cure any defects in the execution and delivery of any of the other Loan Documents and all other instruments executed in connection with this transaction.

(g)                Additional Documentation.  Borrower shall execute and deliver, or cause to be executed and delivered, any and all other agreements, instruments, or documents which Lender may reasonably request in order to give effect to the transactions contemplated under this Loan Agreement and the other Loan Documents.

(h)                 Legal Existence.  Borrower shall do or cause to be done all things necessary to preserve and keep in full force and effect Borrower's corporate existence in good standing.

(i)                  Maintenance of Assets.  Borrower shall maintain all of its material assets, both real and personal, used in the conduct of its business, in good condition, repair, and working order, and supplied with all necessary equipment, and cause to be made all necessary repairs, renewals, replacements, and improvements thereof and thereto, so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

(j)                  Notice of Matters.  Borrower shall promptly inform Lender of (i) any and all material adverse changes in its financial condition, (ii) all claims which could materially affect its financial condition, (iii) after the commencement thereof, notify Lender of all actions, suits, and proceedings before any court or any governmental department, commission, or board, and (iv) the creation, occurrence, or assumption of any actual or contingent liabilities not permitted under this Loan Agreement.

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(k)                 Primary Depository and Treasury Relationship.  Borrower shall establish and maintain its primary depository account(s) and treasury relationship with Lender.

(l)                  Indemnification.  Borrower agrees to indemnify and hold Lender harmless from and against any and all loss, cost, damage, claim, and expense incurred by Lender on account of: (i) the violation of any representation or warranty set forth in this Loan Agreement or in the other Loan Documents; (ii) Borrower's failure to perform any obligations of this Loan Agreement or of the other Loan Documents; (iii) any loss, damage, claim, charge, or expense, including reasonable attorneys' fees, resulting from injury or damage to persons or property which may arise in connection with the use or operation of the Collateral; (iv) the disbursement of the Loan proceeds, the condition of the Collateral; or (v) Borrower's failure to fully comply with all governmental requirements; provided, however, that the foregoing indemnification shall not apply to the extent such loss, cost, damage, claim, or expense is caused by Lender's gross negligence or willful misconduct.  The foregoing indemnifications shall survive the closing of the Loan, payment of the Loan, the exercise of any right or remedy under any of the Loan Documents, any subsequent sale or transfer of the Collateral, and all similar or related events or occurrences.  This indemnity shall not extend to or cover acts of fraud, willful misconduct or gross negligence by Lender.

12.              Financial Covenants.  Until the Loan and all obligations and liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and satisfied, Borrower agrees and covenants that Sharps Compliance Corp., a Delaware corporation, (the "Holding Company") will maintain the following financial covenants to be evidenced by a Certificate of Compliance as provided in Section 14(c) below, unless Lender shall otherwise consent in writing:

(a)                 Minimum Tangible Net Worth.  Borrower shall cause the Holding Company to maintain, as of the end of each fiscal quarter, beginning March 31, 2014, its Tangible Net Worth at not less than $10,500,000.00.

(b)                Unencumbered Liquidity.  Borrower agrees that the Holding Company must maintain, as of the end of each quarter, beginning March 31, 2014, Unencumbered Liquid Assets (as defined below) of not less than $5,000,000.00.  Whenever an evaluation of the fair market value is called for under the terms of this Agreement, Lender shall be entitled to rely on the most current quotations in the latest available addition of The Wall Street Journal.   Within 45 days after the end of each quarter, Borrower shall furnish to Lender an account statement verifying the Holding Company's compliance with the foregoing covenant.

As used herein, the term "Tangible Net Worth" means total assets excluding all intangible assets, less total liabilities excluding any Subordinated Debt.  As used herein, the term "Subordinated Debt" means any indebtedness which has been subordinated by written agreement to all indebtedness now or hereafter owing to Lender, such agreement to be in form and substance acceptable to Lender.  The term "Unencumbered Liquid Assets" shall mean cash, certificates of deposit, U. S. treasury securities, U. S. governmental agency securities, corporate bonds rated AAA or better by a recognized rating company, unrestricted common and preferred stock of a company which has a majority of its issued and outstanding shares publicly traded and which is listed on the New York Stock Exchange, American Stock Exchange, or which are NASDAQ National Market Issues as listed in The Wall Street Journal, each share of which has a market value of $5.00 or more, and mutual funds and/or unit investment trusts that invest solely in any of the foregoing, all of which are free of any liens, security interests, credit obligations (including options and commodities contracts), and other encumbrances and shall not include any of same held in an IRA, margin account, or other restricted or retirement accounts.  Unless otherwise specified, all accounting and financial terms and covenants set forth above are to be determined according to generally accepted accounting principles, consistently applied.

Page 9

13.               Negative Covenants.  Until the Loan and all other obligations and liabilities of Borrower under this Loan Agreement and the other Loan Documents are fully paid and satisfied, Borrower will not, without the prior written consent of Lender:

(a)                 Nature of Business; Change of Management or Operation.   Borrower shall not make any material change in the nature of the business as carried on as of the date hereof, including, but not limited to, (i) any material change in the management or operation of its business, (ii) changes in its organizational documents, or (iii) change in its fiscal year or accounting practices.

(b)                 Liquidations; Mergers; Consolidations.   Borrower shall not liquidate, merge, or consolidate with or into any other entity.

(c)                 Sale of Assets.  Borrower shall not sell, transfer, or otherwise dispose of any of its assets or properties, including sale-leaseback transactions, other than in the ordinary course of business.

(d)                Liens.  Borrower shall not create, incur, or assume any lien or encumbrance on the Collateral.

(e)                 Transfer of Ownership.  Borrower shall not permit the sale or other transfer of any ownership interest in Borrower.

(f)                  Government Regulation.  Borrower shall not (i) be or become subject at any time to any law, regulation, or list of any government agency including, without limitation, the U.S. Office of Foreign Asset Control list that prohibits or limits Lender from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower, or (ii) fail to provide documentary and other evidence of Borrower's identity as may be requested by Lender at any time to enable Lender to verify Borrower's identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

14.               Reporting Requirements.  Borrower will, unless Lender shall otherwise consent in writing, furnish to Lender:

(a)                 Events of Default.  As soon as possible and in any event within 5 days after the occurrence of each Event of Default for which Borrower obtains knowledge thereof, a statement of Borrower setting forth the details of such Event of Default and the action which Borrower proposes to take with respect thereto.

(b)                Monthly.  If there is an outstanding balance on the Borrowing Base Loan (other than an outstanding Letter of Credit), as soon as available and in any event within 30 days after end of each month, beginning December 31, 2013, a current financial statement of the Holding Company as of the end of such month, which financial statement shall contain a balance sheet and income statement, together with a (i) current aging analysis of Borrower's accounts receivable, (ii) a list of Borrower's inventory by location and type (to include the following:  raw materials, work in progress, and finished goods), and (iii) a Borrowing Base Certificate in the form attached as Exhibit "B".

Page 10

(c)                 Quarterly.  If there is not an outstanding balance on the Borrowing Base Loan, as soon as available and in any event within 45 days after the end of each fiscal quarter of the Holding Company, beginning December 31, 2013, a current financial statement of Borrower as of the end of such period, which financial statement shall contain a balance sheet and income statement, together with (i) current aging analysis of Borrower's accounts receivable, (ii) a Borrowing Base Certificate, and (iii) a Certificate of Compliance in the form of Exhibit "C".

(d)                Annual.  As soon as available and in any event within 120 days after the end of each fiscal year, beginning June 30,, 2014, a  CPA audited current financial statement of Borrower as of the end of such period, which financial statement shall contain a balance sheet and income statement.

(e)                 Governmental Action.  Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any court or any governmental department, commission, or board affecting Borrower or any of its properties.

(f)                  Evidence of Payment of Obligations.  Upon demand of Lender, evidence of payment of all assessments, taxes, charges, levies, liens, and claims against Borrower's properties.

(g)                 Right to Additional Information. Borrower shall furnish Lender with such additional information and statements, lists of assets and liabilities, tax returns, and other reports with respect to its financial condition and business operations as Lender may reasonably request from time to time.

All references to a preceding period shall mean the period ending as of the end of the month, quarter, or fiscal year for which the applicable report is delivered.  All references to a period immediately following shall mean the period beginning on the first day of the month, quarter or fiscal year following the end of the period for which the applicable report is delivered.  All financial reports furnished to Lender pursuant to this Loan Agreement shall be prepared in such form and such detail as shall be satisfactory to Lender, shall be prepared on the same basis as those prepared in prior years, and shall be duly certified by the reporting party as being true and correct in all material aspects.

15.               Events of Default.  Each of the following shall constitute an "Event of Default" under this Loan Agreement:

(a)                 Any default in the payment when due of any part of the principal of, or interest on, the Notes or any other indebtedness or obligation from time to time owing by Borrower to Lender.

(b)                The failure to maintain the insurance coverage as required by the Loan Documents.

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(c)                 Any default, breach or failure in the performance of any term, condition, warranty, agreement, or covenant of this Loan Agreement or any of the other Loan Documents.

(d)                Any representation or warranty set forth in this Loan Agreement or in any of the other Loan Documents is proven to have been false or untrue in any material respect when made.

(e)                 Any event which results in or permits the acceleration of the maturity of any indebtedness of Borrower to others under any agreement or undertaking.

(f)                  Borrower suspends the transaction of its business for any period of time.

(g)                If Borrower (as defined below): ( i) becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due; (ii) generally is not paying its debts as such debts become due; (iii) has a receiver, trustee, or custodian appointed for, or take possession of, all or substantially all of the assets of such party, either in a proceeding brought by such party or in a proceeding brought against such party and such appointment is not discharged or such possession is not terminated within 60 days after the effective date thereof or such party consents to or acquiesces in such appointment or possession; (iv) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy, or similar laws all of the foregoing (hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition for relief is filed against such party under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within 60 days after the filing thereof, or an order for relief naming such party is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization, or other relief of debtors now or hereafter existing is requested or consented to by such party; (v) fails to have discharged within a period of 30 days any attachment, sequestration, or similar writ levied upon any property of such party; or (vi) fails to pay within 30 days any final money judgment against such party.

(h)                 Any material adverse change in the financial condition or results of operation of Borrower since the effective date of any financial statement previously furnished to Lender by Borrower has occurred and is continuing.

Notwithstanding anything in the Loan Documents to the contrary, upon the occurrence of an Event of Default as defined by subparagraphs (a) or (b) above, Lender shall give Borrower notice of same and if such Event of Default is not cured within 10 days after the date such notice is given by Lender, Lender may take any of the actions provided in paragraph 16 below.  Notwithstanding anything in the Loan Documents to the contrary, upon the occurrence of an Event of Default other than as specified in subparagraphs (a) or (b) above, Lender shall give Borrower notice of same, and if such Event of Default is not cured within 30  days after the date such notice is given by Lender, Lender may take any of the actions provided in paragraph 16 below; provided, however, if such Event of Default is not cured within such 30 day period but Borrower is taking all reasonable actions in regard to curing same, Borrower shall be allowed a reasonable time to perform or take such actions required to cure the Event of Default, and Lender shall be advised of the status of all actions being taken by Borrower.  NOTWITHSTANDING ANYTHING IN THIS LOAN AGREEMENT TO THE CONTRARY, CONCURRENTLY AND AUTOMATICALLY WITH THE OCCURRENCE OF AN EVENT OF DEFAULT, FURTHER ADVANCES ON THE LOAN SHALL CEASE UNTIL SUCH EVENT OF DEFAULT IS CURED.

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16.               Remedies.  Upon the occurrence of any one or more of the foregoing Events of Default, and the expiration of any applicable right to cure period, the entire unpaid balance of principal of the Note, together with all accrued but unpaid interest thereon, and all other indebtedness then owing by Borrower to Lender, shall, at the option of Lender, become immediately due and payable without further presentation, demand for payment, notice of intent to accelerate, notice of acceleration or dishonor, protest or notice of protest of any kind, all of which are expressly waived by Borrower.  All rights and remedies of Lender set forth in this Loan Agreement and in any of the other Loan Documents may also be exercised by Lender at its option to be exercised in its sole discretion, upon the occurrence of an Event of Default, and the expiration of any applicable right to cure period.

17.               Rights Cumulative.  All rights of Lender under the terms of this Loan Agreement shall be cumulative of, and in addition to, the rights of Lender under any and all other agreements between Borrower and Lender including, (but not limited to, the other Loan Documents), and not in substitution or diminution of any rights now or hereafter held by Lender under the terms of any other agreement.

18.               Waiver and Agreement.  Neither the failure nor any delay on the part of Lender to exercise any right, power or privilege herein or under any of the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  No waiver of any provision in this Loan Agreement or in any of the other Loan Documents and no departure by Borrower therefrom shall be effective unless the same shall be in writing and signed by Lender, and then shall be effective only in the specific instance and for the purpose for which given and to the extent specified in such writing.  No modification or amendment to this Loan Agreement or to any of the other Loan Documents shall be valid or effective unless the same is signed by the party against whom it is sought to be enforced.

19.               Maximum Interest Rate.  Regardless of any provision contained in this Loan Agreement, any of the other Loan Documents, or any other document or instrument executed pursuant hereto or thereto, Lender shall never be entitled to receive, collect, charge or apply, as interest on the Loan contemplated hereunder, any amount in excess of the highest lawful rate, and, in the event Lender ever receives, collects, charges or applies as interest, any such excess, such amount which would be excessive interest shall be deemed a partial prepayment of principal and treated hereunder as such; and, if the principal debt of the Loan is paid in full, any remaining excess shall forthwith be paid to Borrower.  In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Borrower and Lender shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Loan so that the interest rate is uniform throughout the entire term of the Loan; provided, that if the Loan is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the highest lawful rate, Lender shall refund to Borrower or credit against the principal debt of the Loan the amount of such excess and, in such event, Lender shall not be subject to any penalties provided by any laws for contracting for, charging, taking, reserving, or receiving interest in excess of the highest lawful rate.

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20.               Chapter 346.  Borrower and Lender hereby agree that Chapter 346 of the Texas Finance Code (regulating certain revolv­ing credit loans and revolving tri-party accounts) shall not apply to the Loan Documents.

21.               Notices.  Except as otherwise provided herein, all notices, demands, requests, and other communications required or permitted hereunder shall be given in writing and sent by (i) personal delivery, or (ii) expedited delivery service with proof of delivery, or (iii) United States mail, postage prepaid, registered or certified mail, return receipt requested, or (iv) facsimile provided that such facsimile is confirmed by expedited delivery service or by United States mail in the manner previously described), addressed to the addressee at such party's address contained in the Loan Documents, or to such other address as either party shall have designated by written notice, sent in accordance with this paragraph at least 30 days prior to the date of the giving of such notice.  Any such notice or communication shall be deemed to have been given and received either at the time of personal delivery, or in the case of mail, as of 3 days after deposit in an official depository of the United States mail, or in the case of delivery service or facsimile, upon receipt.  To the extent actual receipt is required, rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was received shall be deemed to be receipt of the notice, demand, request or other communication sent.

22.               Applicable Law.  This Loan Agreement and the other Loan Documents have been executed and delivered in the State of Texas, and the rights and obligations of the parties to this Loan Agreement and the Loan Documents shall be governed by and construed in accordance with the substantive laws of the State of Texas.

23.               Choice of Forum; Consent to Service of Process and Jurisdiction.  Any suit, action, or proceeding against Borrower with respect to this Loan Agreement, the Loan, or any of the Loan Documents may be brought in the courts of Harris County, Texas, or in the United States courts located in the State of Texas, as Lender, in its sole discretion, may elect, and Borrower submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action, or proceeding.  Borrower  irrevocably waives any objections which it may now or hereafter have to the laying of venue of an suit, action, or proceeding arising out of or relating to this Loan Agreement or the Loan brought in the courts located in the Harris County, Texas, and  further irrevocably waives any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum.

24.               Invalid Provisions.  If any provision of this Loan Agreement or any of the other Loan Documents is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Loan Agreement or any of the other Loan Documents shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.  Furthermore, in lieu of each such illegal, invalid or unenforceable provision, there shall be added as part of such Loan Documents a provision mutually agreeable to Borrower and Lender as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.  In the event Borrower and Lender are unable to agree upon a provision to be added to the Loan Documents within a period of 10 business days after a provision of the Loan Documents is held to be illegal, invalid or unenforceable, then a provision acceptable to Lender as similar in terms to the illegal, invalid and unenforceable provision as is reasonably possible and be legal, valid and enforceable shall be added automatically to such Loan Documents.  In either case, the effective date of the added provision shall be the date upon which the prior provision was held to be illegal, invalid or unenforceable.

Page 14

25.              Expenses.  Borrower shall pay all costs and expenses (including, without limitation, the reasonable attorneys' fees of Lender's legal counsel) in connection with (i) the preparation of this Loan Agreement and the other Loan Documents, and any and all extensions, renewals, amendments, supplements, extensions or modifications thereof, (ii) any action required in the course of administration of the Loan, and (iii) any action in the enforcement of Lender's rights upon the occurrence of Event of Default.

26.               Binding Effect.  This Loan Agreement shall be binding upon and inure to the benefit of Borrower and Lender, and their respective heirs, successors, assigns, and legal representatives; provided however, that Borrower may not, without the prior written consent of Lender, assign any rights, powers, duties, or obligations thereunder.

27.               Offset.  Upon an Event of Default which remains uncured after notice and the opportunity to cure,  as provided above, Borrower grants to Lender the right of offset, to secure repayment of the Note, upon any and all moneys, securities, or other property of Borrower and the proceeds therefrom, now or hereafter held or received by or in transit to Lender or any of its agents, from or for the account of Borrower whether for safe keeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or special) and credits of Borrower, and any and all claims of Borrower against Lender (or any of them) at any time existing.

28.               Headings.  Section headings are for convenience of reference only and shall in no way affect the interpretation of this Loan Agreement.

29.               Survival.  All representations and warranties made by Borrower in this Loan Agreement shall survive delivery of the Note and the making of the Loan.

30.               No Third Party Beneficiary.  The parties do not intend the benefits of this Loan Agreement to inure to any third party, nor shall this Loan Agreement be construed to make or render Lender liable to any materialman, supplier, contractor, subcontractor, purchaser or lessee of any property owned by Borrower, or for debts or claims accruing to any such persons against Borrower.  Notwithstanding anything contained herein or in the Note, or in any other Loan Documents, or any conduct or course of conduct by any or all of the parties hereto, before or after signing this Loan Agreement or any of the other Loan Documents, neither this Loan Agreement nor any other Loan Documents shall be construed as creating any right, claim or cause of action against Lender, or any of its officers, directors, agents or employees, in favor of any materialman, supplier, contractor, subcontractor, purchaser or lessee of any property owned by Borrower, nor to any other person or entity other than Borrower.

31.               Counterparts.  This Loan Agreement may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

32.               Waiver of Special Damages.  BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER FROM LENDER IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES.

33.               Imaged Documents.  Borrower and all sureties, endorsers, guarantors, and any other party now or hereafter liable for the payment of the Loan, in whole or in part, (i) understand and agree that Lender's document retention policy may involve the imaging of executed Loan Documents, which includes but is not limited to any note, guaranty, deed of trust, security agreement, assignment, financing statement and any other document which evidences any indebtedness owed by Borrower to Lender and/or secures such indebtedness, and the destruction of the paper original, including the original note, and (ii) waive any rights and/or defenses that it may have to the use of such imaged copies of Loan Documents in the enforcement of any of Lender's rights in a court of law or otherwise and/or  as to any claim that such imaged copies of the Loan Documents are not originals.

Page 15

34.               USA Patriot Act Notification.  The following notification is provided to Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product.  What this means for Borrower:  When Borrower opens an account,  if Borrower is an individual, Lender will ask for Borrower's name, taxpayer identification number, residential address, date of birth, and other information that will allow Lender to identify Borrower, and, if Borrower is not an individual, Lender will ask for Borrower's name, taxpayer identification number, business address, and other information that will allow Lender to identify Borrower.  Lender may also ask, if Borrower is an individual, to see Borrower's driver=s license or other identifying documents, and, if Borrower is not an individual,  to see Borrower's legal organizational documents or other identifying documents.

35.               Entire Agreement.  THIS LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

If the foregoing correctly sets forth our mutual agreement, please so acknowledge by signing and returning the additional copy of this Loan Agreement enclosed herewith.

	
Address:

	
[REDACTED]

	
[REDACTED]

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
Name:

	
 

	
 

	
Title:

	
 

	
ACCEPTED this 28th day of January, 2014

	
	
 

	
 

	
	
BORROWER:

	
	
 

	
 

	
	
SHARPS COMPLIANCE, INC. OF TEXAS

	
	
 

	
 

	
	
By:

	
 

	
	
 

	
Diana Precht Diaz, VP/CFO

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