Document:

Exhibit 10.3

 

Amendment No.
5

to NOTE AND WARRANT PURCHASE Agreement

 

This Amendment No. 5 to Note and Warrant Purchase
Agreement is dated as of July 28, 2017 to be effective as of July 18, 2017, and is between CTI
Industries Corporation, an Illinois corporation (the “Company”); CTI
Supply, Inc., an Illinois corporation f/k/a CTI Helium, Inc., and a Wholly-Owned Subsidiary of the Company, in its capacity
as a guarantor (the “Subsidiary Guarantor”); and BMO PRIVATE EQUITY (U.S.), INC., a Delaware corporation (the
“Purchaser”).

 

The Company and the Purchaser entered into a
Note and Warrant Purchase Agreement dated as of July 17, 2012 (as amended, restated, supplemented or otherwise modified prior
to the effective date hereof, the “Purchase Agreement”), under which, among other things, the Company sold to
the Purchaser and the Purchaser purchased from the Company a note in the aggregate principal amount of $5,000,000.

 

In connection with the Purchase Agreement, the
Subsidiary Guarantor entered into a Guaranty dated as of July 17, 2012 (the “Subsidiary Guaranty”), under which,
among other things, the Subsidiary Guarantor guarantees the prompt and complete payment and performance of the Obligations.

 

The parties now desire to amend the Purchase
Agreement in certain respects.

 

The parties therefore agree as follows:

 

1.            Definitions.
Defined terms used but not defined in this agreement are as defined in the Purchase Agreement.

 

2.            Amendments
to Purchase Agreement. (a) The definition of “Operative Documents” in Section 5.1 of the Purchase Agreement
is hereby amended and restated to read in its entirety as follows:

 

“             “Operative Documents” means
this Agreement, the Note, the Warrant Conversion Note (if any), the Warrant, the Subsidiary Guaranties, the Collateral Documents,
the Side Letter and all other documents, instruments and agreements executed by or on behalf of the Company and delivered concurrently
herewith or at any time hereafter to or for the Purchaser or any Affiliate of Purchaser, all as amended, restated or supplemented
from time to time.

 

     

     

    

 

“Total Funded Debt” means, at any time
the same is to be determined, the aggregate of all Indebtedness for Borrowed Money of the Company and its Subsidiaries, on a consolidated
basis, at such time, plus all Indebtedness for Borrowed Money of any other person or entity which is directly or indirectly guaranteed
by the Company or any of its Subsidiaries or which the Company or any of its Subsidiaries has agreed (contingently or otherwise)
to purchase or otherwise acquire or in respect of which the Company or any of its Subsidiaries has otherwise assured a creditor
against loss. For purposes of this Agreement, (a) “Total Funded Debt” includes (i) the 2016 CTI–Merrick Debt
and the 2016 CTI–Schwan Debt, and (ii) subject to clause (b)(iii) below, the Obligations, but (b) “Total Funded Debt”
does not include (i) any Excluded Flexo VIE Debt, (ii) the Subordinated Debt owing to John H. Schwan and Stephen M. Merrick described
in Section 8.7(f) or (iii) that portion of the Obligations, if any, evidenced by the Warrant Conversion Note
(it being understood and agreed that all other Obligations, including, without limitation, those Obligations evidenced by the Note
shall be included in the calculation of Total Funded Debt hereunder).”

 

(b)           Section 5.1
of the Purchase Agreement is hereby amended by inserting each of the following new definitions in the appropriate alphabetical
order:

 

“            “2017 Extension Period” means
the period from and including the Amendment No. 5 Effective Date through and including the Maturity Date.

 

“Amendment No. 5” means an Amendment
No. 5 to Note and Warrant Purchase Agreement dated as of July 28, 2017, to be effective as of July 18, 2017, between the Company,
CTI Helium, and the Purchaser.

 

“Amendment No. 5 Effective Date” means
July 18, 2017, which is the effective date of Amendment No. 5.

 

“Side Letter” means that certain Consent
and Acknowledgement dated as of July 28, 2017 to be effective as of the Amendment No. 5 Effective Date, by and among the Senior
Lender, the Purchaser and the Company.

 

“Warrant Conversion Note” means a promissory
note in an aggregate principal amount required by the Warrant issued to the Purchaser by the Company in connection with an exercise
of the Put Notice (as defined in the Warrant) under the Warrant and the corresponding conversion thereafter to debt in accordance
with (and as more particularly described in) the Warrant, as revised by the Side Letter, as such promissory note may be amended,
restated, replaced, substituted or otherwise modified from time to time. ”

 

(c)          A
new Section 8.29 is hereby added to the Purchase Agreement immediately following Section 8.28 thereof to read as follows:

 

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“Section 8.29         2017
Extension Period; Engagement of Financial Consultant.

 

(a)          The
Company shall engage, for the duration of the 2017 Extension Period (or any shorter period approved in writing by the Purchaser),
at the Company’s expense, an independent consultant of recognized standing selected by the Company and reasonably acceptable
to the Purchaser (the “Financial Consultant”) to provide business financial planning and other advisory services
to the Company and its Subsidiaries.

 

(b)          Without
limitation, duplication, or derogation of Section 8.5 hereof, during the 2017 Extension Period the Company shall, and
shall cause each Subsidiary to, furnish to the Purchaser and its duly authorized representatives such information respecting the
business and financial condition of the Company and its Subsidiaries as the Purchaser may reasonably request; and without any request,
shall furnish to the Purchaser:

 

(i)          as
soon as available, and in any event no later than July 20, 2017 (or any later date approved in writing by the Purchaser), an engagement
letter, in form and substance (including scope of work) reasonably satisfactory to the Purchaser, with respect to the engagement
by the Company of the Financial Consultant, duly executed by the Company and the Financial Consultant;

 

(ii)         as
soon as available, and in any event no later than July 31, 2017 (or any later date approved in writing by the Purchaser),
a report, in reasonable detail and in form reasonably satisfactory to the Purchaser, either prepared by the Financial Consultant
or prepared by the Company and verified by the Financial Consultant, and in any event certified to by the Company’s chief
financial officer or such other officer acceptable to the Purchaser, showing analyses of the following with respect to the Company
and its Subsidiaries: (A) revenue and profitability by customer and product line; (B) expense-reduction and margin-improvement
initiatives; and (C) working-capital improvements;

 

(iii)        as
soon as available, and in any event no later than July 31, 2017 (or any later date approved in writing by the Purchaser),
and thereafter as soon as available and in any event by the first Business Day of each week (unless otherwise approved in writing
by the Purchaser), a 13-week cash flow forecast, in reasonable detail and in form reasonably satisfactory to the Purchaser, showing
projected cash receipts and cash disbursements (including referencing line item sources and uses of cash) of the Company and its
Subsidiaries over the immediately succeeding 13-week period, together with a reconciliation of actual cash receipts and cash disbursements
of the Company and its Subsidiaries from the prior week against the then-current forecast of the Company and its Subsidiaries (and
showing any deviations on a cumulative basis and providing a written explanation of the variances), either prepared by the Financial
Consultant or prepared by the Company and verified by the Financial Consultant, and in any event certified to by the Company’s
chief financial officer or such other officer acceptable to the Purchaser;

 

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(iv)        as
soon as available, and in any event by the first Business Day of each week (or any later date approved in writing by the Purchaser),
an accounts receivable and accounts payable aging, prepared by the Company and certified to by its chief financial officer or such
other officer acceptable to the Purchaser;

 

(v)         as
soon as available, and in any event no later than August 15, 2017 (or any later date approved in writing by the Purchaser),
a copy of the Company’s strategic plan to address before the end of the 2017 Extension Period (as defined in the Senior Credit
Agreement) the pending maturities of the Obligations and the Senior Debt, such strategic plan to be in reasonable detail prepared
by the Company and in form reasonably satisfactory to the Purchaser;

 

(vi)        as
soon as available, and in any event no later than August 31, 2017 (or any later date approved in writing by the Purchaser),
evidence, in form and substance satisfactory to the Purchaser, of the Company’s having taken action satisfactory to the Purchaser
to implement and effect the strategic plan described in clause (v) above; and

 

(vii)       as
soon as available, and in any event no later than September 15, 2017 (or any later date approved in writing by the Purchaser),
a collateral checklist, a perfection certificate, and updated schedules to this Agreement, each in reasonable detail and in form
and substance reasonably satisfactory to the Purchaser.

 

(c)          The
Company shall cause the management of the Company and its Subsidiaries to meet with the Financial Consultant and the Purchaser,
in person or by telephone, at such reasonable times and reasonable intervals as the Company may determine, but at least once per
week by telephone during the 2017 Extension Period (or less frequently as approved in writing by the Purchaser).”

 

3.            Fee.
As consideration for the (x) consent of the Purchaser to the Senior Lender Tenth Amendment (as defined below) and (y) amendments
to the Purchase Agreement to be effected by this agreement, the Company shall pay to the Purchaser a fee in an amount equal to
the product of (a) $834,666, times (b) 11.5% per annum, compounded daily, which fee shall accrue on a daily basis commencing on
the date hereof and continuing thereafter until the earlier of (i) the date of receipt by the Company of a Put Notice (as such
term is defined in the Warrant), or such later date, when a promissory note is issued by the Company to the Purchaser evidencing
the obligations under the Warrant in accordance with the terms and conditions of the Side Letter and otherwise in form and substance
acceptable to the Purchaser (the “Warrant Note”) and (ii) October 17, 2017, and be fully earned upon the execution
of this agreement by the Purchaser, and due and payable upon the earlier of (x) January 17, 2018 and (y) indefeasible payment in
full in cash of the Warrant Note. The foregoing fee shall be nonrefundable once paid.

 

4.            Reaffirmation
of Subsidiary Guaranty. The Subsidiary Guarantor hereby expressly does each of the following:

 

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		(1)	consents to the execution by the Company and the Purchaser
of this agreement;

 

		(2)	acknowledges that the “Indebtedness” (as defined
in the Subsidiary Guaranty) includes all of the “Obligations” under and as defined in the Purchase Agreement, as amended
from time to time (including as amended by this agreement);

 

		(3)	acknowledges that the Subsidiary Guarantor does not have
any set-off, defense, or counterclaim to the payment or performance of any of the obligations of the Company under the Purchase
Agreement or the Subsidiary Guarantor under the Subsidiary Guaranty;

 

		(4)	reaffirms, assumes, and binds itself in all respects to
all of the obligations, liabilities, duties, covenants, terms, and conditions contained in the Subsidiary Guaranty;

 

		(5)	agrees that all such obligations and liabilities under
the Subsidiary Guaranty continue in full force and that the execution and delivery of this agreement to, and its acceptance by,
the Purchaser will not in any manner whatsoever do any of the following:

 

		(A)	impair or affect the liability of the Subsidiary Guarantor
to Purchaser under the Subsidiary Guaranty;

 

		(B)	prejudice, waive, or be construed to impair, affect, prejudice,
or waive the rights and abilities of the Purchaser at law, in equity, or by statute against the Subsidiary Guarantor pursuant
to the Subsidiary Guaranty; or

 

		(C)	release or discharge, or be construed to release or discharge,
any of the obligations and liabilities owing to the Purchaser by the Subsidiary Guarantor under the Subsidiary Guaranty; and

 

		(6)	represents and warrants that each of the representations
and warranties made by the Subsidiary Guarantor in any of the documents executed in connection with the Note and the other Operative
Documents remain true and correct as of the date of this agreement.

 

5.            Representations
and Warranties. To induce the Purchaser to enter into this agreement, the Company hereby represents to the Purchaser as follows:

 

		(1)	that the Company is duly authorized to execute and deliver
this agreement and is and will continue to be duly authorized to borrow monies under the Purchase Agreement, as amended by this
agreement, and to perform its obligations under the Purchase Agreement, as amended by this agreement;

 

		(2)	that the execution and delivery of this agreement and the
performance by the Company of its obligations under the Purchase Agreement, as amended by this agreement, do not and will not
conflict with any provision of law or of the articles of organization or operating agreement of the Company or of any agreement
binding upon the Company;

 

		(3)	that the Purchase Agreement, as amended by this agreement,
is a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except
as enforceability might be limited by bankruptcy, insolvency, or other similar laws of general application affecting the enforcement
of creditors’ rights or by general principles of equity limiting the availability of equitable remedies;

 

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		(4)	that the representation and warranties set forth in Section
6 of the Purchase Agreement, as amended by this agreement, and Section 6 of the Senior Credit Agreement, as amended, in each
case are true and correct with the same effect as if those representations and warranties had been made on the date hereof, except
that all references to the financial statements mean the financial statements most recently delivered to the Purchaser and except
for changes specifically permitted under the Purchase Agreement, as amended by this agreement;

 

		(5)	that the Company has complied with and is in compliance
with all of the covenants set forth in the Purchase Agreement, as amended by this agreement, including the covenants stated in
section 8 of the Purchase Agreement; and

 

		(6)	that as of the date of this agreement no Default and no
Event of Default under Section 10 of the Purchase Agreement, as amended by this agreement, has occurred or is continuing.

 

6.            Conditions.
The effectiveness of this agreement is subject to satisfaction of the following conditions:

 

		(1)	that the Purchaser has received the following:

 

		(A)	a copy of this agreement, duly executed by the parties;

 

		(B)	a copy of an amendment to the Senior Credit Agreement (the
“Senior Lender Tenth Amendment”) and each of the other documents required to be delivered in accordance with
that amendment, each in form and substance satisfactory to the Purchaser and duly executed by all applicable Persons;

 

		(C)	a consent under the subordination and intercreditor agreement
in respect of the BMO Mezzanine Debt, in form and substance satisfactory to the Purchaser, duly executed by all applicable Persons;

 

		(D)	a side letter in form and substance acceptable to the Purchaser
from Senior Lender and acknowledged and agreed to by the Company that includes (x) a consent regarding permitting the Purchaser
to (1) exercise its put right under the Warrant at any time and (2) at such time, convert the value of such put right under the
Warrant to indebtedness constituting “Subordinated Debt” under the Senior Subordination Agreement pursuant to the
issuance of a promissory note by the Company in favor of the Purchaser, (y) the agreement by the parties thereto to the corresponding
terms in respect of such “Subordinated Debt” and promissory note, including, without limitation, a non-default interest
rate of no less than 11.5% per annum, compounded daily, and (z) the agreement of the Senior Lender to exclude the new “Subordinated
Debt” related to the Warrant Note from the calculation of the Total Leverage Ratio; and

 

		(E)	all other documents, certificates, resolutions, and opinions
of counsel as the Purchaser requests;

 

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		(2)	that the Company has paid, and the Purchaser has received,
the fees and expenses of counsel for the Purchaser in an amount equal to $30,800.00; and

 

		(3)	that all legal matters incident to the execution and delivery
of this agreement are satisfactory to the Purchaser and its counsel.

 

7.          General.
(a) This agreement and the rights and duties of the parties hereto are governed by, and are to be construed in accordance
with, the internal laws of State of Illinois without regard to principles of conflicts of laws. Wherever possible each provision
of the Purchase Agreement and this agreement is to be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of the Purchase Agreement and this agreement is prohibited by or invalid under any such law, that provision
will be deemed ineffective to the extent of that prohibition or invalidity, without invalidating the remainder of that provision
or the remaining provisions of the Purchase Agreement and this agreement.

 

(b)          This
agreement is an Operative Document.

 

(c)          This
agreement binds each party and their respective successors and assigns, and this agreement inures to the benefit of each party
and the successors and assigns of the Purchaser.

 

(d)          Except
as specifically modified or amended by the terms of this agreement, the terms and provisions of the Purchase Agreement, the Subsidiary
Guaranty, and the other Operative Documents are incorporated by reference herein and in all respects continue in full force and
effect. The Company, by execution of this agreement, hereby reaffirms, assumes, and binds itself to all of the obligations, duties,
rights, covenants, terms, and conditions contained in the Purchase Agreement and the other Operative Documents to which it is a
party.

 

(e)          Each
reference in the Purchase Agreement to “this Agreement,” “hereunder,” “hereof,” or words of
like import, and each reference to the Purchase Agreement in any and all instruments or documents delivered in connection therewith,
are deemed to refer to the Purchase Agreement, as amended by this agreement.

 

(f)          The
Company shall pay all costs and expenses in connection with the preparation of this agreement and other related loan documents,
including, without limitation, reasonable attorneys’ fees and time charges of attorneys who are employees of the Purchaser
or any affiliate or parent of the Purchaser. The Company shall pay any and all stamp and other taxes, UCC search fees, filing fees,
and other costs and expenses in connection with the execution and delivery of this agreement and the other instruments and documents
to be delivered hereunder, and agrees to save the Purchaser harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such costs and expenses.

 

(g)          The
Company hereby waives and releases any and all current existing claims, counterclaims, defenses, or set-offs of every kind and
nature which it has or might have against the Purchaser arising out of, pursuant to, or pertaining in any way to the Purchase Agreement,
any and all documents and instruments in connection with or relating to the foregoing, or this agreement. The Company hereby further
covenants and agrees not to sue the Purchaser or assert any claims, defenses, demands, actions, or liabilities against the Purchaser
arising out of, pursuant to, or pertaining in any way to the Purchase Agreement, any and all documents and instruments in connection
with or relating to the foregoing, or this agreement.

 

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(h)          The
parties may sign this agreement in several counterparts, each of which will be deemed an original but all of which together will
constitute one instrument. Receipt of an executed signature page to this agreement by facsimile or other electronic transmission
will constitute effective delivery of that executed signature page. Electronic records of executed Operative Documents (including
this agreement) maintained by the Purchaser will be deemed to be originals.

 

[Signature pages follow]

 

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(Signature Page to Amendment No. 5 to
Note and Warrant Purchase Agreement)

 

The parties are signing this Amendment No. 5
to Note and Warrant Purchase Agreement effective as of the effective date stated in the introductory clause.

 

	 	CTI INDUSTRIES CORPORATION
	 	 
	 	By:	/s/ John H. Schwan
	 	Name:	John H. Schwan
	 	Title:	Chairman/CEO
	 	 	 
	 	CTI SUPPLY, INC.
	 	(f/k/a CTI Helium, Inc.)
	 	 
	 	By:	/s/ John H. Schwan
	 	Name:	John H. Schwan
	 	Title:	Vice President
	 	 	 
	 	BMO PRIVATE EQUITY (U.S.), INC.
	 	 
	 	By:	/s/ Jason Swanson
	 	Name:	Jason Swanson
	 	Title:	Managing DirectorExhibit 10.1 Transfer Agreement

 

TRANSFER AGREEMENT

 

This Transfer Agreement (“Agreement”) is made as of the 11th day of August, 2017 by and between Jay Joshi, MD (hereinafter referred to as “Executive”), being an officer and director of National Pain Centers, Inc., a Nevada corporation (hereinafter referred to as “NPC”), and Wellness Center USA, Inc., a Nevada corporation and owner of all issued and outstanding shares of stock in NPC (hereinafter referred to as the “Company”), and NPC.

 

RECITALS:

 

The Company is engaged in the business of providing certain healthcare and encryption and authenticating solutions, products and services through certain subsidiary entities owned or controlled by the Company, including NPC (the “Company Business”).

 

NPC is engaged in the business of acquisitions and management of top-tier medical practices in the interventional and multi-modal pain management sector, providing administrative Interventional and Multimodal Pain Management NPC Business (the “NPC Business”).

 

The Company wishes to discontinue its operation of the NPC Business and to expand into other areas of the health-care field which are complementary with the Company Business, so that it might increase the potential value of issued and outstanding shares of common stock in the Company (the “Company Shares”).

 

The Executive desires to acquire from the Company, and the Company desires to transfer to the Executive, all issued and outstanding shares of common stock in NPC (the “NPC Shares”), representing 100% voting and ownership control of all issued and outstanding shares of stock in NPC.

 

NOW, THEREFORE, in consideration of the foregoing Recitals and the respective representations, warranties and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

Certain Definitions

 

As used in this Agreement, and in addition to any other defined terms used herein, each of the following terms shall have the following meaning:

 

1.1Affiliate.  “Affiliate” of a Person shall mean a Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, the first Person. 

 

1.2Associate.  “Associate” of a Person shall mean (i) an Affiliate of such Person; or (ii) a relative or spouse of such Person, or a relative of such spouse; or (iii) any trust or other estate in which such Person (or any relative or spouse of such Person) has a substantial beneficial interest or as to which such Person (or any relative or spouse of such Person, or a relative of such spouse) serves as a trustee or in a similar fiduciary capacity. 

 

1.3Closing.  “Closing” shall mean the delivery of the documents and materials described in Section 3. 

 

1.4Closing Date.  “Closing Date” has the meaning set forth in Section 3.1. 

 

1.5ERISA.  “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. 

 

1.6Financial Statements.  “Financial Statements” shall meaning the financial statements of NPC and the Company, respectively, as further identified herein. 

1.7Indebtedness.  “Indebtedness” shall mean (i) all obligations for borrowed money, whether current or funded, secured or unsecured; (ii) all obligations on the deferred purchase price of any property or NPC Business; (iii) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired (even though the rights and remedies of the seller, owner or lender under such agreement in the event of a default may be limited to repossession or sale or such property); (iv) all obligations secured by a purchase money mortgage or other Lien to secure all or part of the purchase price of property subject to such mortgage or Lien; (v) all obligations under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (vi) any obligation in respect of bankers’ acceptances or letters of credit; (vii) any obligations secured by Liens on property, whether or not such obligations were assumed at the time of acquisition of such property; (viii) all obligations of a type referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii) above which is directly or indirectly guaranteed by any Affiliate; (ix) any accrued and unpaid interest or other charges on any of the foregoing obligations; (x) present, future or contingent payment obligations under any qualified or non-qualified welfare, benefit or other plan, agreement or arrangement with any former or present employee or Associate of such employee; (xi) Taxes; and (xii) all other forms of obligations except trade accounts payable and accrued expenses incurred in the ordinary course of business. 

 

1.8Intellectual Property.  “Intellectual Property” shall mean trademarks, service marks, trade names, trade dress, copyrights, and similar rights, including registrations and applications to register or renew the registration of any of the foregoing, patent and patent applications, and inventions, processes, designs, formulae, trade secrets, know-how, confidential information, and all similar intellectual property rights, and licenses of any of the foregoing. 

 

1.9Lien.  “Lien” shall mean any mortgage, trust deed, pledge, security interest, claim, charge or encumbrance of any kind. 

 

1.10Material and Materially.  “Material” and “Materially”, unless otherwise specifically defined, shall mean and include any specified item, event or matter which, in the aggregate, results in, or may have as a result, an impact which exceeds or may exceed $25,000.00. 

 

1.11Person.  “Person” shall mean any individual, business corporation, municipal or not-for-profit corporation, trust, general or limited partnership, limited liability company, joint venture, unincorporated association, joint stock company, or any other entity or organization of any kind, and any governmental entity, including any agency or political subdivision thereof. 

 

1.12Securities Act.  “Securities Act” shall mean the Securities Act of 1933. 

 

1.13Tax Returns.  “Tax Returns” shall mean all returns, amended returns, declarations, statements, reports, information statements, declarations of estimated taxes, backup withholding returns or reports and other documents required to be filed in respect of Taxes. 

 

1.14Taxes.  “Taxes” shall mean all federal, state, municipal, local and foreign taxes, customs, duties, fees, levies, assessments or charges of any kind whatever including, but not limited to, income, alternative minimum income, franchise, profits, windfall profits, gross receipts, excise, sales, use, license, lease, service, service use, transaction, occupation, severance, stamp, premiums, energy, environmental, withholding, payroll, employment, unemployment, Social Security, worker’s compensation, ad valorem, real or personal property, and capital taxes, and any interest, penalties, additions to tax or other additional amounts with respect thereto. 

 

ARTICLE II

Transfer of the NPC Shares

 

2.1Transfer of the NPC Shares. Subject to the provisions of this Agreement, the Company shall at Closing transfer to the Executive all of the Company’s right, title and interest in and to the NPC Shares, and the Executive and NPC shall at Closing release the Company from any and all liabilities, claims and obligations of the Company in favor of the Executive or NPC and arising from or relating to the operation of the NPC Business through and including the Closing Date which, as of the date hereof, are acknowledged to be, in the aggregate, approximately $365,000. 

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ARTICLE III

The Closing

 

3.1Time and Place of Closing.  The Closing shall take place at the offices of the Company at 9:00 a.m. Central Standard Time, on August 14, 2017, or at such other time, date or place as may be mutually agreed by the parties (the “Closing Date”). 

 

3.2Exchange and Transfer of the Shares and NPC Shares.  At the Closing, the Company shall transfer the NPC Shares and issue the Option Agreement to the Executive in the manner hereinafter provided, and the Executive shall acquire and accept the NPC Shares and the in consideration of the release described in Section 2.1 and Option Agreement in Section 5.5. 

 

3.3Deliveries by the Executive to the Company.  At the Closing, the Executive will deliver to the Company the following: 

 

(a)Counterparts of this Agreement executed by the Executive and NPC; and  

 

(b)Any consents required from the directors of the NPC.  

 

3.4Deliveries by the Company to the Executive.  At the Closing, the Company will deliver to the Executive the following: 

 

(a)Certificates representing the NPC Shares, issued in the name of the Executive; 

 

(b)The Option Agreement; and 

 

(c)Any consents required from directors of the Company. 

 

3.5Non-Deliveries by Executive to the Company.  It is acknowledged and understood that the Executive shall only deliver what is listed hereinabove, and shall not deliver or divest himself of the stock or ownership of any other company or corporation including, but not limited to, the Company and National Pain Centers, LLC, an Illinois limited liability company wholly owned by the Executive.  The Executive currently serves as a director of the Company and shall continue in such capacity until the next election of directors or until he resigns or is removed.  

 

ARTICLE IV

Joint Representations and Warranties of the Parties

 

Except as disclosed in the Schedules and Exhibits attached hereto (individually referred to as a “Schedule” and “Exhibit” and collectively as “Schedules” and “Exhibits”) as referenced to in the specific Section or Sections hereof to which the disclosure, Exhibit or Schedule pertains, each of the parties the represents and warrants to the other, as to the best of such party’s knowledge and belief, as follows:

 

4.1Title to the NPC Shares.  The Company owns, beneficially and of record, all of the NPC Shares, free and clear of any Liens and Indebtedness. 

 

4.2Organization; Qualification.  NPC is a company duly organized, validly existing and in good standing under the laws Nevada.  NPC has the corporate power and authority to own all of its properties and assets and to carry on the business as presently conducted and is qualified as a foreign corporation in any jurisdiction where the failure to be so qualified would have a Material adverse effect on NPC, its business or operations. 

 

4.3Authority Relative to this Agreement.  The party has full and complete power and authority to execute and deliver this Agreement on behalf of himself and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by the party and any and all related agreements and documents, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized.  When executed and delivered, this Agreement, and all related agreements and documents, shall have been duly and validly executed and delivered by the party and will not violate, constitute or cause a default, or result in any loss of a Material right under, any provision of law or the articles of incorporation of NPC, or any rule, regulation, order, judgment, decree, contract, instrument or agreement to which the party is subject, or to which he is a party, and will not result in any termination, acceleration or maturity of any liability, Indebtedness or obligation of NPC.  This Agreement constitutes, and when executed and delivered each of the related agreements and documents shall constitute, a valid and binding obligation of the party. 

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4.4Governmental Authorization and Compliance.  There are no violations of any NPC license, franchise, permit and other governmental authorization, nor are there any proceedings pending or threatened to revoke or limit any such license, franchise, permit, or other governmental authorization. 

 

4.5Capitalization.  The records of NPC report accurately the authorized capitalization of NPC and the number of NPC Shares presently outstanding and issued, all of which are duly authorized, validly issued, fully paid and non-assessable.  There are no additional outstanding preemptive rights, subscriptions, warrants, options, contracts, calls or other rights of any kind with regard to any NPC Shares or any other security of NPC of any kind. 

 

4.6Financial Statements.   The party has received a complete and accurate copy of the balance sheet for the most recent fiscal year end and interim period ending with the most recent quarter, and the related statements of income and retained earnings for said periods (the “Financial Statements”).  The Financial Statements fairly present the financial position of NPC as of the respective dates, and the results of its operations and changes in financial position for the periods covered thereby, and except to the extent otherwise set forth in the footnotes contained therein have been prepared in accordance with generally accepted accounting principles consistently applied. 

 

4.7Title to and Location of Assets.  NPC has good and marketable title to all of its assets, real and personal, tangible and intangible, including those capitalized on or included in the Financial Statements, except only for properties and assets disposed of in the ordinary course of business. 

 

4.8Leases.  NPC is a not a party to any Lease.   

 

4.9Material Contracts.  NPC’s records contain all Material contracts, agreements, instruments, and commitments arising from or relating to the assets and business operations of NPC or to which it is bound.   

 

4.10Intellectual Property.  NPC owns or has the right to use all registered trademarks, registered copyrights, patents and patent applications, if any, used by NPC in its business operations.  To the knowledge of the party, no other Person possesses any right, title or interest in, to or under such Intellectual Property.   

 

4.11Labor Relations.  There are no controversies pending between NPC and any of its present or former employees which: (a) affect, or can reasonably be expected to affect, adversely and Materially, its assets or business operations; or (b) relate to any effort to prevent, restrict or delay consummation of any of the transactions contemplated by this Agreement. 

 

4.12Employment Agreements.  There are no written or oral agreements with any employees of NPC which are not terminable upon notice of ninety (90) days or less. 

 

4.13Employee Benefit Plans.  There are no employee benefit plans within the meaning of applicable law that affect employees of NPC.  

 

4.14Maintenance of Tangible Assets.  The assets of NPC have been and will be from the date hereof through the Closing Date, maintained in good and operable condition ordinary wear and tear excepted. 

 

4.15Accounts Receivable.  Accounts receivable are fairly reported in the Financial Statements, arose in the ordinary course of business and are the result of arm’s length, bona fide transactions.   

 

4.16Litigation.  There are no actions, suits, claims, investigations or proceedings legal, administrative or arbitrative) pending against NPC or any officer, manager or employee thereof, whether at law or in equity and whether civil or criminal in nature, before or by any federal, state, municipal or other court, arbitrator, governmental department, commission, agency or instrumentality. 

 

4.17Absence of Changes.  Since the date of the Financial Statements, NPC has operated in the ordinary course, and there has been no: (a) Material adverse change in the operations, properties or condition (financial or otherwise); (b) damage, destruction or loss (whether or not covered by insurance) Materially and adversely affecting the assets or business operations or that could reasonably be expected to affect, Materially and adversely, the assets or business operations thereof 

 

4.18Insurance.  NPC records contain a complete copy of all currently effective policies of insurance of which NPC is the owner or insured or covering any of its assets or business operations, indicating for each policy the carrier, risks insured, the amounts of coverage, deductible, and expiration date.  All such policies are in full force and effect, all premiums due thereon have been paid, and NPC has complied in all Material respects with the provisions of such policies.  

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4.19Taxes.  All Tax Returns required to be filed by or on behalf of NPC have been duly filed on a timely basis and such Tax Returns are complete and accurate.  All Taxes due and payable have been paid in full on a timely basis.  NPC has withheld and paid over all Taxes required to have been withheld and paid over in connection with amounts paid or owing to any employee, creditor, independent contractor, or other Person.  The liability for unpaid Taxes for all periods ended on or prior to the date of this Agreement included in the Financial Statements does not exceed the liability accruals for Taxes (excluding reserves for deferred Taxes) reflected in such Financial Statements. 

 

ARTICLE V

Other Agreements of the Parties

 

5.1Expenses.  Whether or not the transactions contemplated are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs and expenses. 

 

5.2Best Efforts.  Subject to the terms and conditions of this Agreement, each of the parties will use its commercially reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 

 

5.3Further Assurances.  From time to time, without further consideration, each party at its own expense will execute and deliver, or cause to be executed and delivered, such documents as the other may reasonably request to more effectively consummate the transactions contemplated hereby.   

 

5.4Survival of Representations and Warranties.  The representations and warranties of the parties contained in this Agreement shall survive the Closing for a period ending on the one (1) year anniversary of the Closing Date.   

 

5.5Employment Agreement. At Closing, that certain employment agreement between the Executive and NPC dated as of February 28, 2014 (the “Employment Agreement”), shall terminate and be of no further force or effect, except for the non-disclosure, non-solicitation and non-compete provisions thereof, which shall remain effective as provided therein. At Closing, the Company shall issue to the Executive options to acquire 500,000 Company Shares at an option exercise price of $0.25 per Company Share, pursuant to an Option Agreement in the form of the copy attached hereto as Exhibit 5.5 (the “Option Agreement”), in full and complete satisfaction of any and all accrued and unpaid compensation, consulting fees, or other consideration payable to the Executive for services provided by him and arising from or related to the operation of the NPC Business through and including the Closing Date, under the Employment Agreement or otherwise, and for services provided by him as a director of the Company through the Closing Date. 

 

ARTICLE VI

Closing Conditions

 

6.1Conditions to Each Party’s Obligations.  The respective obligations of each party to effect the transactions contemplated hereby shall be subject to the fulfillment at or before the Closing Date of the condition that neither the Executive and Company shall be subject to any order, decree or injunction of a court of competent jurisdiction which prevents or delays any of the transactions contemplated by this Agreement or the continuation of NPC’s or the Company’s business in the manner conducted prior to the Closing and, further, that this Agreement, and the transaction described herein, be approved by the directors of the Company and NPC.  

 

6.2Conditions to the Obligations of Executive.  The obligations of the Executive to effect the transactions contemplated hereby shall be further subject to the fulfillment at or before the Closing Date of the following conditions, any one or more of which may be waived by Executive: 

 

(a)Compliance by the Company.  The Company shall have performed and complied in all material respects with the provisions contained in this Agreement required to be performed and complied with by it at or before the Closing Date. 

 

(b)Representations and Warranties.  The representations and warranties of the Company set forth in this Agreement were true and correct in all material respects as of the date of this Agreement and shall also be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date, except as otherwise contemplated by this Agreement. 

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6.3Conditions to the Obligations of the Company.  The obligations of the Company to effect the transactions contemplated hereby shall be further subject to the fulfillment at or before the Closing Date of the following conditions, any one or more of which may be waived by the Company: 

 

(a)Compliance by the Executive.  The Executive shall have performed and complied in all material respects with the provisions contained in this Agreement required to be performed and complied with by or before the Closing Date. 

 

(b)Representations and Warranties.  The representations and warranties of the Executive set forth in this Agreement shall have been true and correct in all material respects as of the date of this Agreement and shall also be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date, except as otherwise contemplated by this Agreement. 

 

6.4Other Documents.  Each of the parties will furnish to the other party such certificates of such party’s members, shareholder, officers, directors, employees, Associates or Affiliates, or such other documents, as may be reasonably necessary to evidence fulfillment of the conditions set forth in this Article VI as the other party may reasonably request. 

 

ARTICLE VII

Termination

 

7.1Termination.  This Agreement may be terminated at any time prior to the Closing Date: 

 

(a)By the written agreement of Executive and the Company; 

 

(b)By either Executive or the Company by written notice to the other hereto after 5:00 p.m. Central Standard Time on August 31, 2017 if the transactions contemplated hereby shall not have been consummated pursuant hereto, unless such date is extended by the mutual written consent of Executive and the Company; or 

 

(c)By either the Executive or the Company if: (i) the representations and warranties of the Executive or the Company, shall not have been true and correct in all material respects as of the date when made; (ii) the Executive or the Company shall have failed to perform and comply with, in all material respects, all agreements and covenants required by this Agreement to have been performed or complied with by such parties prior to the time of such termination and such failure to perform or comply shall be incurable or shall not have been cured within a reasonable period of time but not less than ten (10) days in duration following notice of such failure, provided that the terminating party shall have performed and complied with, in all material respects, all agreements and covenants required by this Agreement to have been performed or complied with by such terminating party prior to such time; or (iii) any event shall have occurred or any fact or condition shall exist that shall have made it impossible to satisfy a condition precedent to the terminating party’s obligations to consummate the transactions contemplated by this Agreement, unless the occurrence of such event or existence of such fact or condition shall be due to the failure of the party seeking to terminate this Agreement or any of its Associates or Affiliates to perform or comply with any of the covenants, agreements, or conditions 

 

7.2Effect of Termination.  In the event this Agreement is terminated pursuant to the provisions of Section 7.1, this Agreement shall become void and have no effect, without any liability on the part of any party hereto, or any of its members, shareholder, directors, officers, employees, agents, consultants, representatives, agents, Associates or Affiliates.  

 

ARTICLE VIII

Miscellaneous Provisions

 

8.1Entire Agreement.  This Agreement sets forth the entire agreement between the parties and supersedes all prior agreements and understandings between the parties with respect thereto. 

 

8.2Amendment and Modification.  This Agreement may be amended, modified or supplemented only by written agreement signed by each of the parties. 

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8.3Waiver of Compliance; Consents.  Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefit thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.  Whenever this Agreement requires or permits the consent of any party, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 8.3. 

 

8.4Investigations; Survival of Representations and Warranties.  Each of the representations and warranties of the parties contained herein or in any Exhibit, Schedule, certificate, or other document delivered before or at the Closing shall continue and survive the Closing Date. 

 

8.5Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given if: (a) delivered personally; or (b) mailed by certified mail (return receipt requested), postage prepaid; or (c) sent by overnight courier; or (d) transmitted by telefacsimile, email or other electronic transmission;  to the parties at the addresses currently on record at the office of the Company (or at such other address for a party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof.) 

 

8.6Assignment.  Neither this Agreement nor any of the rights, NPC Shares or obligations hereunder shall be assigned by any party, nor is this Agreement intended to confer upon any other person except the parties hereto any rights or remedies hereunder. 

 

8.7Governing Law.  This Agreement shall be governed by the laws of the State of Illinois as to all matters including, but not limited to, matters of validity, construction, effect, performance and remedies, and, as partial consideration for the other party’s execution and performance hereunder each party waives personal service of any and all process upon it, to the extent permitted by law, and consents that all such service of process be made by upon such party at the address and in the manner set forth in Section 8.5 of this Agreement and service so made shall be deemed to be completed upon the earlier of actual receipt or three (3) days after the same shall have been posted to such party’s address. The parties agree that jurisdiction as to any dispute shall be vested in the Circuit Court of Cook County Illinois only and that all parties agree that such Court is the proper venue for all disputes. In the event of any dispute, the prevailing party shall be entitled to recover its actual attorney’s fees and costs expended. 

 

8.8Binding Effect and Benefit.  The provisions hereof shall be binding upon, and shall inure to the benefit of, the parties, and their respective heirs, executors, administrators, its successors, and assigns. 

 

8.9Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

 

8.10Severability.  Whenever possible, each of the provisions of this Agreement shall be construed and interpreted in such a manner as to be effective and valid under applicable law.  If any provisions of this Agreement or the application of any provision of this Agreement to any party or circumstance shall be prohibited by, or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition without invalidating the remainder of such provision, any other provision of this Agreement, or the application of such provision to other parties or circumstances. 

 

8.11Interpretation.  The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. 

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the date set forth above.

 

	Executive:

	Wellness Center USA, Inc.

	 

 

By:________________________________

      Jay Joshi, CEO

	 

 

By:_______________________________

      Andrew Kandalepas, CEO

 

 

 

National Pain Centers, Inc.

 

By: ______________________________

          President

    

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