UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
___________________________
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
___________________________
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Consent Solicitation Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Consent Solicitation Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule14a-12
ONCOLOGIX TECH, INC.
(Name of Registrant Specified in Charter)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
_____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
(5) Total fee paid:
_____________________________________________________________________
[X] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
_____________________________________________________________________
1
(2) Form, schedule or registration statement no.:
_____________________________________________________________________
(3) Filing party:
_____________________________________________________________________
(4) Date filed:
_____________________________________________________________________
2
Oncologix Tech, Inc.
__________________, 2008
Dear Stockholder:
This Proxy Statement is furnished to you by the Board of Directors of Oncologix
Tech, Inc., a Nevada corporation ("we", "us", "our", the "Company" or
"Oncologix"), in connection with the Board of Directors' request that you give
your written consent via proxy to each of the following Proposals:
1. Approval of the sale by Oncologix of all of our assets related to our
Oncosphere product, including intellectual property, which make up
substantially all of our assets, to Institut fur Umwelttechnologien GmbH, a
German company ("IUT") (the "Asset Sale Transaction Proposal").
2. Approval of an amendment to the Company's Articles of Incorporation to
increase the authorized Common Stock from 200,000,000 shares to 500,000,000
shares and the authorized preferred stock from 10,000,000 shares to
50,000,000 shares (the "Increase in Authorized Shares Proposal").
The details of these Proposals, the background and purpose, are set forth in the
enclosed Proxy Statement, which you are urged to read carefully. The Board of
Directors believes that the Proposals are in the best interests of the Company
and its shareholders. In determining to recommend the Proposals, the Board of
Directors carefully reviewed and considered the terms and conditions of the
Proposals and the factors described in the enclosed Proxy Statement.
The Board of Directors has unanimously approved the Proposals and is requesting
the holders of our outstanding shares of the Company's common stock, $.001 par
value (the "Common Stock") to appoint a proxy to give their written consent to
both of the Proposals. We do not intend to and are not required to have a
special meeting to consider the Proposals under Nevada law and do not intend to
do so..
In accordance with the law of the State of Nevada (where we are incorporated)
and the Company's Bylaws, the Board of Directors set ______________, 2008 as the
record date (the "Record Date") for the determination of the Company's
stockholders who are entitled to execute, withhold or revoke consents relating
to the Proposals. Only holders of record as of the close of business on the
Record Date may execute, withhold or revoke consents with respect to the
Proposals. Under Nevada law, in order for the Proposals to become effective,
each Proposal will require the written consent of at least a majority of the
Company's outstanding shares of Common Stock.
By Order of the Board of Directors,
/s/ Judy Lindstrom
-----------------------------------
JUDY LINDSTROM
Chief Executive Officer
3
ONCOLOGIX TECH, INC.
PROXY STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION........................................................ 5
What are we asking you to do ?........................................ 5
Who is making the solicitation?....................................... 5
Who is paying for the solicitation?................................... 5
Who can consent to the Proposals?..................................... 5
What should you do to consent?........................................ 5
How many consents must be granted in favor of each of the Proposals?.. 5
Can I change or revoke my consent?.................................... 6
Is shareholder consent to the Proposals assured?...................... 6
PROPOSAL 1 THE ASSET SALE TRANSACTION PROPOSAL............................ 6
Reasons for the Asset Sale............................................ 6
Summary Terms of Asset Sale Transaction............................... 7
About IUT............................................................. 10
About the new IUT Subsidiary.......................................... 11
Past Contacts and Negotiations between the Company and Third Parties.. 11
Reason for Acceptance of IUT Proposal................................. 12
Further Plans and Operations.......................................... 12
Unaudited Pro Forma Condensed Consolidated Financial Statements...... 14
PROPOSAL 2 THE INCREASE IN AUTHORIZED SHARES PROPOSAL..................... 25
Regulatory Proposal................................................... 25
Approval Required..................................................... 25
Reason for Proposal................................................... 25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 28
FORWARD LOOKING STATEMENTS................................................. 29
EXHIBIT A ASSET PURCHASE AGREEMENT........................................ 30
EXHIBIT B FORM OF PROXY CARD.............................................. 48
4
ONCOLOGIX TECH, INC.
PROXY STATEMENT
GENERAL INFORMATION
In this Proxy Statement, references to the "Company", "Oncologix ", "we",
"us" or "our" refer to Oncologix Tech, Inc., a Nevada corporation, and its
subsidiaries. This summary should only be read in conjunction with, and is
qualified in its entirety by reference to, the more detailed information
contained in the Appendices hereto.
What are we asking you to do?
The Company is asking you to appoint a proxy and to direct that proxy to
consent to two corporate actions: (1) the Asset Sale Transaction Proposal, and
(2) the Increase in Authorized Shares Proposal. Please see the sections titled
"PROPOSAL 1 -- THE ASSET SALE TRANSACTION PROPOSAL" and "PROPOSAL 2 --THE
INCREASE IN AUTHORIZED SHARES PROPOSAL" for the full text of, and a more
complete description of, the Proposals.
Who is making the solicitation?
The solicitation is being made by the Company's Board of Directors.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED EACH OF THE PROPOSALS SET FORTH
HEREIN.
ACCORDINGLY, THE BOARD RECOMMENDS YOU CONSENT TO PROPOSALS 1 AND 2.
Who is paying for the solicitation?
The Company will pay the costs of preparing and disseminating this Proxy
Statement and the material enclosed herewith. We will, upon request, reimburse
brokerage firms, banks and others for their reasonable out-of-pocket expenses in
forwarding proxy material to beneficial owners of stock or otherwise in
connection with this solicitation of consents. The Company's mailing address is
P.O. Box 8832, Grand Rapids, Michigan 49518-8832 and its telephone number is
(616) 977-9933.
Who can consent to the Proposals?
Only holders of record of our Common Stock at the close of business on
__________, 2008 (or their proxies) have the right to consent to the Proposals.
You have the right to consent to the Proposals with respect to shares of Common
Stock you held on that date. As of the Record Date, __________, 2008, there were
________ shares of our Common Stock outstanding.
What should you do to consent?
You may consent to the Proposals by signing the Proxy Card attached to this
Proxy Statement and returning it in the enclosed postage-paid envelope. A
pre-addressed, postage-paid envelope is provided for this purpose.
Alternatively, you may consent to the Proposals by marking, signing and dating
the enclosed form of Proxy Card as promptly as possible and returning it by fax
to (616) 977-9955 or by scanning the signed Proxy Card and sending it by email
to ______________________.
How many consents must be granted in favor of each of the Proposals?
The Proposals will each require the written consent of the holders of at
least a majority of the outstanding shares of the Company's Common Stock. Thus,
any abstentions, "broker non-votes" (shares held by brokers or nominees as to
which they have no discretionary authority to consent on a particular matter and
have received no instructions from the beneficial owners or persons entitled to
consent thereon), or other limited proxies will have the effect of a rejection
of the Proposals.
5
Can I change or revoke my consent?
Yes. If you deliver a consent by mail, by facsimile or via the Internet,
you have the right to revoke your consent in writing (by mailing or by facsimile
of another Consent Card indicating you do not consent to the Proposal(s), which
Card bears a later date) or via the Internet (by voting online at a later time),
provided that any revocation of your Consent will only be effective if the
Company has not already received Consents from a majority of the Company's
outstanding shares of Common Stock.
Is Shareholder Consent to the Proposals Assured?
We believe that sufficient consents will be obtained when this Proxy
Statement has been distributed to the shareholders because the consequences of a
rejection of the Proposals would be extremely adverse to the Company and its
shareholders (as described below). While shareholder consent to the Proposals
cannot be assured, members of Management and Major Shareholders holding
approximately 30.44% of the outstanding common shares have indicated an
intention to grant their consents. The Company has not entered into any
agreements to obtain any consents nor, to our knowledge, have any other parties
done so.
PROPOSAL 1 - THE ASSET SALE TRANSACTION PROPOSAL
A PROPOSAL TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY,
INCLUDING THE ASSETS OF ITS WHOLLY-OWNED SUBSIDIARY, TO INSTITUT
FUR UMWELTTECHNOLOGIEN GMBH, A GERMAN COMPANY.
(ITEM 1 ON THE CONSENT CARD)
As of August 18, 2008, the Board of Directors, believing it to be in the
best interests of the Company and its shareholders, unanimously approved the
sale (the "Asset Sale Transaction") of the assets related to our Oncosphere
product, which make up substantially all of the assets of the Company, to
Institut fur Umwelttechnologien GmbH, a German company ("IUT"). Pursuant to the
terms of an Asset Purchase Agreement, dated August 18, 2008 (the "Asset Purchase
Agreement"), the Company is to sell substantially all of its assets to IUT in
consideration of the payment of $50,000 in cash, the assumption of approximately
$205,000 of liabilities that are related to the Oncosphere, the issuance to the
Company of a minority equity interest in a new company established by IUT, to be
called "IUT Medical, Gmbh ("IUTM"), to own these assets and continue the
development and commercialization of the Oncosphere and the right to royalties
of three percent on the Net Sales of the new company. All of the proceeds of the
sale, including royalty payments, if any, will be retained by Oncologix and will
not be distributed to the shareholders.
Reasons for the Asset Sale
As has been described in the various Reports we have filed with the
Securities and Exchange Commission ("SEC"), we have always relied on continued
financing from investors and lenders to remain in business. During December
2007, it became apparent that the Company's efforts to raise adequate additional
funds from investors would not succeed. It is believed that this was due to a
combination of causes; technical difficulties that required an increase in both
the amount of funds and the period of time required for completion of the
Oncosphere development process and adverse conditions in the securities markets.
Because cash on hand was insufficient to fund continued Oncosphere development
activities it became necessary to cease operations and release the Company's
employees. The Board of Directors then concluded that the only way to assure the
continuance of the Oncosphere development effort and the presentation of value
for the shareholders and creditors of the Company would be to sell the Company's
assets to a party with the financial ability to continue the effort.
Because we lacked the necessary funds to continue operations, we failed to
perform a "milestone event" as specified in the Master License Agreement with
the University of Maryland, which was the submission of an application to the
FDA for an Investigational Device Exemption (or foreign equivalent) or the
commencement of human clinical trials on or before September 16, 2008. On
October 10, 2008, the Company entered into an agreement with the University of
Maryland pursuant to which the Master License Agreement between the parties was
modified so as to extend the date for accomplishment of the "milestone event"
until January 5, 2009.
6
In view of the circumstances described in this Proxy Statement, and after
discussions with various parties, as described below, the Board of Directors
have determined that the Asset Sale Transaction is prudent at this time and in
the best interests of, and fair to, the Company's shareholders. It is the
opinion of the Board of Directors that if this transaction is not consummated,
the Company is likely to become a "shell", with only nominal assets,
approximately $155,000 in accounts payable and $2,797,000 in principal and
interest to become due under the terms of certain outstanding convertible
promissory notes. Funds needed to maintain the Company's status as a reporting
company or even its corporate existence would have to be obtained from investors
and there is no assurance of any success in doing so.
IT SHOULD BE NOTED THAT EVEN UPON THE CONSUMMATION OF THE ASSET SALE, OUR
CONTINUED INTEREST IN THE ONCOSPHERE TECHNOLOGY AND PRODUCT WILL BE SUBJECT TO
ALL OF THE RISKS AND UNCERTAINTIES INHERENT IN A DEVELOPMENT STAGE COMPANY IN
THE MEDICAL TECHNOLOGY INDUSTRY, INCLUDING RISKS INVOLVING NEED FOR ADDITIONAL
CAPITAL, TECHNOLOGY UNCERTAINTIES, HEALTHCARE REIMBURSEMENT AND REFORM, AN
INTENSELY COMPETITIVE INDUSTRY, INTELLECTUAL PROPERTY RIGHTS, PRODUCT LIABILITY
CLAIMS, ENVIRONMENTAL RISKS, AND THE ABILITY TO INITIATE OPERATIONS AND MANAGE
GROWTH.
Summary Terms of Asset Sale Transaction
The following summary highlights the material terms of the proposed Asset
Sale Transaction involving our sale of all the assets related to our Oncosphere
product (the "Assets"), which make up substantially all of our assets, to
Institut fur Umwelttechnologien GmbH, a German company ("IUT") pursuant to the
terms of the Asset Purchase Agreement, substantially in the form of Appendix A.
This summary is not a complete statement of all relevant information, facts or
materials. You should read this Proxy Statement, the Asset Purchase Agreement
and the other materials attached to this Proxy Statement in their entirety to
fully understand the Proposal and its consequences to you and the Company.
The Asset Purchase Agreement
Pursuant to the Asset Purchase Agreement, we will, subject to certain terms
and conditions, including approval by our stockholders, either by the written
consent of a sufficient majority under Nevada law or at a meeting of
stockholders, sell substantially all of our assets to IUT and assign to IUT our
rights under a certain Master License Agreement with the University of Maryland.
IUT will form a new subsidiary, to be called, "IUT Medical Gmbh" ("IUTM"), to
hold the Assets, complete the development and commercialization of the
Oncosphere and such other radiation-based medical products as it may deem
appropriate. IUTM will be organized as a German "Gesellschaft mit beschranker
Haftung", a form of business organization similar to a limited liability company
in the United States.
It is important to note that among the conditions to the Closing is a
requirement that the University of Maryland consent to a modification of the
Master License Agreement that is acceptable to IUT. The University of Maryland
has agreed with the Company to extend the deadline for satisfaction of the
milestone event described above until January 5, 2009, provided that certain
conditions are met, namely the issuance of 2,000,000 shares of the Company's
Common Stock to the University (in addition to the 3,000,000 shares of Common
Stock previously issued to the University pursuant to the existing Master
License Agreement), that IUTM deliver a reasonably acceptable Business Plan to
the University on or before November 30, 2008 and that the Asset Sale
Transaction and Increase in Authorized Shares Proposal are approved by our
shareholders and consummated on or before January 5, 2009. The substantive
provisions of the new Master License Agreement with IUTM are expected to be
substantially similar to the Company's existing Master License Agreement except
that the milestone dates will be extended to future dates mutually agreed to by
IUTM and the University of Maryland.
Purchase Price
Oncologix will receive the following consideration for this sale: (a)
$50,000 in cash at the Closing; (b) the assumption by IUT of those of our
liabilities (approximately $205,000, including approximately $53,000 owed to
IUT) that are directly related to the development of the Oncosphere product; (c)
7
the issuance to us of a twenty percent (20%) equity interest in IUTM; and (d)
the right to royalties equal to three percent (3%) of the Net Sales of IUTM (as
defined in the Asset Purchase Agreement). We, IUT and IUTM will also enter into
certain covenants, described below. We estimate that costs associated with Asset
Sale Transaction related expenses (consisting of accounting and legal costs and
proxy solicitation expenses) will be approximately $70,000.
After the Closing of the asset sale, we propose to enter into discussions
with IUTM with a view to obtaining marketing rights to the Oncosphere, and
possibly other IUTM products, in exchange for a decrease in the royalties to
become due to us or even a possible relinquishing of all royalties if our Board
of Directors deems the marketing rights to be of greater value than the royalty
payments.
The Assets to be Sold
The Assets being sold to IUT consist of any patent rights, copyrights,
software (including all source codes), trade secrets, scientific knowledge and
technical information, inventions, know how, developments and improvements, data
and other intellectual property, and know how owned, held by or otherwise being
in the lawful possession of Oncologix, relating to the Oncosphere System,
including (1) assignment of the right to use the product name "Oncosphere", (2)
assignment of the patent license agreement from the University of Maryland,
covering the technology supporting the Oncosphere System, (3) our rights under
our sublicense agreement with Fountain Pharmaceuticals, Inc., (4) all design
related documentation kept and contained in the Oncologix document control
system, (5) manufacturing and development equipment set forth on Oncologix asset
listings, and (6) Oncosphere product inventory in the possession and control of
Oncologix or any Oncologix vendor, all as specifically listed in the Asset
Purchase Agreement.
Assets to be Retained
The assets that we now own and expect to retain are of nominal value,
consisting of a nominal amount of cash and used office and laboratory equipment
located in the United States and not considered sufficiently valuable or useful
to ship to Germany. Our Financial Statements reflect approximately $92,000 in
prepaid commissions (related to debt financings) that are being expensed over
the life of the two-year promissory notes and $13,000 in prepaid expenses,
primarily costs of our insurance policies, which are being expensed over a
twelve month period. In addition, the Company will have an investment
representing a 20% equity interest in IUTM. The value of this interest is
250,000 Euros, or approximately $367,275 using a dollar to Euro exchange rate of
1.4691 on August 18, 2008. This value was calculated based on a proposed 500,000
Euro investment by IUT in IUTM which will represent a 40% interest in IUTM. See
the Pro-Forma Financial Statements included in this Proxy Statement.
Liabilities to be Assumed
At the closing of the Asset Sale Transaction, IUT will assume and agree to
pay, perform and discharge all debts of Oncologix arising out of unpaid amounts
owed to vendors, contractors and consultants for materials or services directly
applied in the development of the Oncosphere product (approximately $205,000 of
which approximately $53,000 is owed to IUT and affiliates for past services),
specifically listed in the Asset Purchase Agreement.
Liabilities to be Retained
The Company will retain and remain obligated to pay approximately $152,000
in accrued but unpaid officer salaries, $150,000 in accrued but unpaid
accounting and legal fees and $5,000 in miscellaneous accounts payable as well
as approximately $2,797,000 in principal and interest to become due under the
terms of certain outstanding convertible promissory notes. See the Pro-Forma
Financial Statements included in this Proxy Statement. Cash proceeds from the
Asset Sale by way of royalties or other distributions from IUTM are not expected
to be available for at least two years after the Closing. We will attempt to
discharge these obligations by raising additional capital from investors or
lenders and/or obtaining conversions into capital stock or extensions of payment
dates.
8
Representations and Warranties
The Asset Purchase Agreement contains customary representations and
warranties from each of the parties relating to, among other things, their
authority to enter into the Asset Purchase Agreement. Certain representations
and warranties were made as of specific dates and may be subject to important
qualifications, limitations and supplemental information agreed to in
negotiating the terms of the Asset Purchase Agreement.
Certain Covenants
The Asset Purchase Agreement contains customary covenants from each of the
parties.
Superior Offers
The Asset Purchase Agreement provides that in the event that we receive an
unsolicited proposal that the Board of Directors has in good faith concluded
(after consultation with its legal counsel) that such proposal will lead to a
superior offer and that the failure to consider such proposal would be
inconsistent with its fiduciary obligations under applicable law, we will be
permitted to: (i) furnish nonpublic information to the third party making such
proposal, and (ii) engage in negotiations with the third party with respect to
the proposal. Further, if after consultation with legal counsel and a financial
advisor, the Board of Directors determines that the proposal constitutes a
superior offer, we will be permitted to withdraw our recommendation to the
stockholders to approve the Asset Sale Transaction and enter into an agreement
with respect to the proposal.
Conditions to Closing
The obligations of the parties to consummate the Asset Sale Transaction are
subject to certain customary closing conditions, including, among other things,
that the representations and warranties are accurate as of the closing, the
covenants have been complied with, there has been no material adverse effect,
with respect to, among other things, the assets being acquired by IUT, and that
the necessary consents and approvals have been obtained (including approval of
the Asset Sale Transaction by our stockholders and an agreement to a
modification to the Master License Agreement by the University of Maryland).
Costs
The Asset Purchase Agreement provides that the parties will be responsible
for their own costs and expenses incurred in connection with the Asset Sale
Transaction. Any sales taxes will be paid by IUT.
Regulatory Approvals
We believe that no state or federal regulatory approval is required to be
obtained by us in connection with the Asset Sale Transaction. In addition, we
have not made any representations or warranties as to whether any export
licenses or permits are required in connection with the Asset Sale Transaction.
However, pursuant to the Asset Purchase Agreement, IUT is responsible for (i)
determining whether any export licenses or permits are required in connection
with the Asset Sale Transaction, and (ii) obtaining any such export licenses or
permits.
Dissenters' or Appraisal Rights
Under Nevada law, our stockholders are not entitled to dissenters' or
appraisal rights for their shares in connection with the Transaction.
Accounting Treatment
We will record the Asset Sale Transaction in accordance with accounting
principles generally accepted in the United States. Upon completion of the
disposition, we expect to recognize a pre-tax gain equal to the difference of
the cash proceeds received at closing plus any liabilities assumed by IUT plus
the value of our interest in IUTM which we believe will be approximately
$367,275, based upon the currency exchange rate as of August 17, 2008. We will
recognize expenses associated with the Asset Sale Transaction as costs are
incurred. The total Asset Sale Transaction expenses expected to be incurred are
approximately $70,000.
9
Certain Federal and State Income Tax Consequences
The Asset Sale Transaction will be a taxable transaction for us. We will
realize gain or loss with respect to each asset sold measured by the difference
between the proceeds received by us on such sale and our tax basis in the assets
sold. For purposes of calculating the amount of our gain or loss, the proceeds
received by us will include the cash received, the amount of our liabilities
that are assumed and any other consideration we receive for our assets. The tax
on the Asset Sale Transaction has been reduced by net operating loss
carryforwards. Utilization of the net operating loss carryforwards will be
limited if a change in the Company's ownership should occur as defined by
Section 382 and Section 383 of the Internal Revenue Code.
Interests of Certain Persons in the Asset Sale Transaction
When they approved the Asset Sale Transaction and the Asset Purchase
Agreement and recommended their approval by the shareholders, our Board of
Directors were aware and took into consideration that Messrs. Andrew M. Green
and Adam G. Lowe, former Directors and executive officers, may in the future be
engaged as consultants to IUTM and may therefore have interests in the Asset
Sale Transaction other than their interests as our stockholders generally. This
possibility was, however, considered to be advantageous to the Company because
it would assure that their technical knowledge would continue to be available to
IUTM and would benefit the Company as a holder of equity in IUTM. To our
knowledge, there are no present agreements relating to any engagement with any
former Directors or officers. In addition, Judy Lindstrom, our President, Chief
Executive Officer and a member of our Board of Directors is expected, as
provided under German law, to become a member of the Board of Directors of IUT,
representing the interest of Oncologix. Compensation for that service, if any,
is expected to be nominal.
Effect of the Asset Sale Transaction on the Company
If our stockholders approve the Asset Sale Transaction, the Board of
Directors currently expects the closing of the Asset Sale Transaction to occur
within sixty (60) days from the date of this Proxy Statement, provided all
conditions to closing are satisfied or waived. After the closing, we expect to
continue to participate as a voting member of IUTM and to apply any proceeds
from any sale of such interest or any royalties received from IUTM to general
corporate purposes including continuing efforts to discharge debt and to seek
acquisitions and new ventures.
Required Approval and Board Recommendation
The Board of Directors has concluded that the Asset Sale Transaction is in
the best interests of our stockholders and has approved the Asset Sale
Transaction, subject to the approval of the holders of a majority of our
outstanding Common Stock. The Board of Directors recommends that you "CONSENT"
to the Proposal.
About IUT
IUT was founded by a group of German scientists in 1992 as a privately
owned German "Gesellschaft mit beschranker Haftung", a form of business
organization similar to a limited liability company in the United States. It is
concentrated on manufacturing special analytic devices and advanced technology
developments and has extensive experience in isotope technology, spectroscopy,
sensor development, plasma and laser technology, radiation measurement and
analytical chemistry. Its services include the development of new measuring
instruments, environmental technologies, prototypes and a series of small
instruments. Since 1993, it has produced high quality radioactive labeled
compounds for the medical, pharmacy and life science industries. IUT and certain
of its personnel were previously engaged under contract with the Company to
provide development, manufacture and testing services in connection with the
development of the Oncosphere, including the use of certain laboratory
facilities and equipment and the services of personnel skilled and experienced
in the handling, processing and development of radiation products. IUT is
located in a science and technology park in Berlin (Volmerstrasse 7B, D-12489
Berlin HRB 46 572 Germany) and currently has 25 highly skilled employees.
IUT maintains a website at http://www.iut-berlin.info/8.0.html?&L=1. IUT's phone
number is 49 30 6392-5511.
10
About the new IUT Subsidiary
IUT has formed a new subsidiary, also as a German "Gesellschaft mit
beschranker Haftung" (Gmbh), called IUT Medical Gmbh ("IUTM") to acquire our
Oncosphere assets, complete the development and commercialization of the
Oncosphere and possibly other radiation based medical products. A German Gmbh is
controlled by its owners or members, who have voting power in proportion to
their ownership interests. Because we expect to own initially a 20% interest in
IUTM, we expect to have 20% of the voting power of IUTM. We will have the right
to designate a representative to attend and exercise our right to vote at
meetings of the owners.
The initial ownership interests in IUTM are expected to be allocated as
follows:
a. 20% to Oncologix in consideration of our agreement to enter into
and perform under the Asset Purchase Agreement;
b. 40% to IUT in consideration of its capital contribution of
(euro)500,000 (each Euro is equivalent to approximately $1.4691
in United States currency as of August 18, 2008); its expenses
and efforts in connection with the organization of IUTM; its
agreeing to provide facilities and sell raw materials to IUTM as
provided in the Asset Purchase Agreement; its making available to
IUTM of (i) intellectual property owned by IUT necessary or
useful in the conduct of business by IUTM and (ii) the use of
IUT's licenses and permits necessary for the handling and
processing of radioactive materials. Under the terms of the Asset
Purchase Agreement, IUT will provide appropriate office and plant
facilities to IUTM at IUT's cost for the same. IUT will also sell
radiation materials to IUTM for use in the manufacture of IUTM's
products at IUT's cost, as defined in the Asset Purchase
Agreement. IUTM will also have the right to act as the exclusive
distributor of IUT's products to users in the medical device
industry; and
c. 40% is reserved for issuance to future investors in IUTM and for
issuance as compensation to key employees, consultants, suppliers
and the like. We have no knowledge of and do not believe that
there is any arrangement whereunder any of our former or current
officers or directors will receive any interest in IUTM.
If at any time any owner of IUTM determine to sell all or part of its
ownership interest in IUTM, that owner must first offer it to IUTM and then the
other owners of IUTM at the same price and under the same terms as may be
offered by an unrelated party. The consent of at least 75% of the voting power
of IUTM will be necessary for a sale of that company or all of its assets. Upon
any such sale or liquidation, each owner will be entitled to receive a share of
the net proceeds in proportion to its ownership interest at the time.
Past Contacts and Negotiations between the Company and Third Parties
During the period between December 1, 2007 and April 30, 2008, the Company
contacted several participants in the medical radiation industry to determine
any interest in entering into collaboration with the Company or in purchasing
the Oncosphere assets. Although there were initial expressions of interest from
two companies in the industry, they both decided not to pursue the matter.
On or about February 11, 2008, Mr. Andrew M. Green, then a director and
Chief Executive Officer of the Company, advised us that he, together with Mr.
Adam G. Lowe, then also a director and President of the Company, and another
party had formed a new entity with a view to purchasing the Oncosphere assets
from the Company. On February 18, 2008 Mr. Green, as Principal of that entity,
submitted such a proposal to the Company and he and Mr. Lowe then resigned as
officers and directors of the Company, stating as their reason the wish to avoid
an appearance of a conflict of interest. That proposal, which was then the only
proposal received by the Company, was the subject of discussions between Mr.
Green and the Company and tentative terms were agreed upon, subject to the
formulation of a definitive agreement and its approval by the shareholders of
the Company. However, on or about February 27, 2008, Mr. Green advised us that
there was reason to believe that one or two of the Company's principal
shareholders would oppose the proposed transaction and that the proposal was
withdrawn.
11
On or about March 1, 2008, representatives of the Company were contacted by
an investment banker, who advised that he proposed to form a new entity to
acquire the Oncosphere assets and that he was confident of the availability of
the necessary funds from venture capital sources. Subsequently, a non-binding
letter of intent was received from the investment banker proposing the
acquisition of the Oncosphere assets in consideration of a cash payment, the
assumption of Oncosphere-related liabilities, royalties on future Oncosphere
sales and the issuance to the Company of a minority equity position in a new
entity to be formed by him.
On or about March 19, 2008 the Company received a proposal from IUT
for the acquisition of the Oncosphere assets that formed the basis for the terms
embodied in the Asset Purchase Agreement. The purchase price was determined
arbitrarily by negotiations between the parties without considering any
particular valuation for the Oncosphere assets, but taking into account the
terms of a competing proposal.
Reason for Acceptance of IUT Proposal
Although the respective prices and other financial terms offered by the
investment banker and by IUT were substantially equivalent, the Board of
Directors determined to accept the IUT proposal for the following reasons,
believing it to be in the best interests of, and fair to, the Company's
shareholders:
o IUT is an established company in the medical radiation industry
with personnel skilled and experienced in the field and with the
necessary plant and equipment to continue the Oncosphere
development. Furthermore, IUT and certain of its personnel were
previously engaged under contract with the Company to provide
development, manufacture and testing services in connection with
the development of the Oncosphere, including the use of certain
laboratory facilities and equipment and the services of personnel
skilled and experienced in the handling, processing and
development of radiation products. Accordingly, IUT and certain
of its personnel were already familiar with the Oncosphere
product and the underlying technology and IUT already possesses
much of the equipment and government permits necessary to
continue the Oncosphere development. On the other hand, the
investment banker would have been required to form a new entity
to acquire the necessary plant and equipment and seek out and
engage qualified personnel.
o While it would have been necessary for both the investment banker
and IUT to seek financing for the Oncosphere project, it was the
judgment of the Company's Board of Directors that IUT would have
a greater likelihood of success in obtaining financing because it
is an established company with experience in the field.
Furthermore, IUT had represented to the Company that it would
obtain a significant German Government grant for continued
development efforts whereas the investment banker would be
completely dependent on private sources of capital. We have been
advised that such a grant has been awarded in the amount of
approximately 373,000 Euros (approximately $510,000 under the
rate of exchange of 1.3665 as of October 15, 2008). IUT expects
to obtain additional financing in the amount of approximately
127,000 Euros (approximately $173,000 under the rate of exchange
of 1.3665 as of October 15, 2008) from its shareholders.
Additional financing is expected to come from other investor in
IUTM.
Future Plans and Operations
Upon approval of the Asset Sale Transaction, we plan to seek to obtain
marketing rights to the Oncosphere and possibly other IUTM products and to seek
other product opportunities in the medical field. We have engaged in preliminary
discussions relative to marketing rights with IUT, but there is no assurance
that we will be successful in obtaining such marketing rights. All of the
Company's plans for the future are dependent on acquiring additional investor
financing. There is no agreement as to, nor any assurance that we can acquire,
12
additional financing on commercially acceptable terms, if at all. If we raise
capital through additional equity financing, the percentage ownership of equity
interests of our existing shareholders in the Company may be diluted and their
relative voting power diminished.
No changes in the Management or Board of Directors of the Company are
anticipated. If the Asset Sale Transaction is not approved or consummated, it is
likely that the Company will become a "shell", with only nominal assets,
approximately $155,000 in accounts payable and $2,797,000 in principal and
interest payable under certain outstanding convertible promissory notes. Funds
needed to maintain the Company's status as a reporting company or even its
corporate existence would have to be obtained from investors and there is no
assurance of any success in doing so. If the Company were to succeed in raising
such funds, the Company would seek to acquire or merge with an operating
business.
We do not intend to become an Investment Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CONSENT TO THE
PROPOSAL TO APPROVE THE ASSET SALE TRANSACTION PURSUANT TO THE ASSET
PURCHASE AGREEMENT.
13
Pro Forma Financial Statements
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheets as of May 31,
2008 and August 31, 2007 and 2006, and the unaudited pro forma condensed
consolidated statements of operations for the nine months ended May 31, 2008 and
the years ended August 31, 2007 and 2006, are based on the historical financial
statements of the Registrant.
The unaudited pro forma condensed consolidated balance sheet as of May 31,
2008 is presented as if the disposition as described in this Proxy Statement
occurred in its entirety on May 31, 2008.
The unaudited pro forma condensed consolidated statement of operations for
the nine months ended May 31, 2008 is presented as if the disposition as
described in this Proxy Statement occurred in its entirety on September 1, 2007.
The unaudited pro forma condensed consolidated balance sheet as of August
31, 2007 is presented as if the disposition as described in this Proxy Statement
occurred in its entirety on August 31, 2007.
The unaudited pro forma condensed consolidated statement of operations for
the year ended August 31, 2007 is presented as if the disposition as described
in this Proxy Statement occurred in its entirety on September 1, 2006.
The unaudited pro forma condensed consolidated balance sheet as of August
31, 2006 is presented as if the disposition as described in this Proxy Statement
occurred in its entirety on August 31, 2006.
The unaudited pro forma condensed consolidated statement of operations for
the year ended August 31, 2006 is presented as if the disposition as described
in this Proxy Statement occurred in its entirety on July 26, 2006 (the date of
acquisition of JDA Medical Technologies, Inc..
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and notes
thereto appearing in the Company's Annual Report on Form 10-KSB for the fiscal
years ended August 31, 2007 and 2006 and its quarterly report on Form 10-QSB for
the interim period ended May 31, 2008.
Preparation of the pro forma information is provided for informational
purposes only, and is based on assumptions considered appropriate by the
Registrant's management. The pro forma financial information is unaudited and is
not necessarily indicative of the results which would have occurred if the
transactions described above had been consummated as of the dates indicated, nor
does it purport to represent the future financial position and the results of
operations for future periods. In management's opinion, all adjustments
necessary to reflect the effects of the transaction listed above have been made.
14
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 2008
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents ............................................... $ 2,471 $ 50,000 (1) $ 52,471
Prepaid expenses and other current assets ............................... 13,047 -- 13,047
Prepaid commissions ..................................................... 92,685 -- 92,685
Current assets of discontinued operations ............................... 70 (70)(2) --
------------ ------------ ------------
Total current assets ............................................... 108,273 49,930 158,203
Property and equipment (net of accumulated depreciation
of $18,207) ............................................................. 4,999 -- 4,999
Deposits and other assets .................................................... 17,254 -- 17,254
Investment in IUTM ........................................................... -- 367,275 (3) 367,275
Longterm assets of discontinued operations ................................... 163,534 (163,534)(2) --
------------ ------------ ------------
Total assets .................................................. $ 294,060 $ 253,671 $ 547,731
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Convertible notes payable (net of discount of $246,055) ................. $ 2,098,945 $ -- $ 2,098,945
Convertible notes payable related parties .............................. 705,450 -- 705,450
Accounts payable and other accrued expenses ............................. 178,574 -- 178,574
Accrued interest payable ................................................ 234,610 -- 234,610
Current liabilities of discontinued operations .......................... 202,484 (202,484)(4) --
------------ ------------ ------------
Total current liabilities .......................................... 3,420,063 (202,484) 3,217,579
Convertible notes payable (net of discount of $346,456) ...................... 743,544 -- 743,544
------------ ------------ ------------
Total liabilities ............................................. 4,163,607 (202,484) 3,961,123
------------ ------------ ------------
Stockholders' Deficit:
Preferred stock, par value $.001 per share; 10,000,000 shares authorized;
342,862 shares issued and outstanding at May 31, 2008 .............. 343 -- 343
Common stock, par value $.001 per share; 200,000,000 shares authorized;
100,130,410 shares issued at May 31, 2008; 71,906,066 shares
outstanding at May 31, 2008 ........................................ 71,906 -- 71,906
Additional paid-in capital .............................................. 48,643,916 -- 48,643,916
Accumulated deficit ..................................................... (52,877,810) 456,155 (5) (52,421,655)
Common stock subscribed, underlying common shares of 5,841,974 .......... 292,098 -- 292,098
------------ ------------ ------------
Total stockholders' deficit ................................... (3,869,547) 456,155 (3,413,392)
------------ ------------ ------------
Total liabilities and stockholders' deficit ................... $ 294,060 $ 253,671 $ 547,731
============ ============ ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
15
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED MAY 31, 2008
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
(Unaudited)
Operating expenses:
General and administrative .............................. $ 456,845 $ -- $ 456,845
Depreciation and amortization ........................... 1,587 -- 1,587
------------ ------------ ------------
Total operating expenses ................................ 458,432 -- 458,432
------------ ------------ ------------
Loss from operations .................................... (458,432) -- (458,432)
------------ ------------ ------------
Other income (expense):
Interest income ......................................... 331 -- 331
Interest and finance charges............................. (1,364,240) -- (1,364,240)
Loss on disposal of assets .............................. (3,194) -- (3,194)
Other income (expense) .................................. (1,443) -- (1,443)
------------ ------------ ------------
Total other income (expense) ............................ (1,368,546) -- (1,368,546)
------------ ------------ ------------
Net loss from continuing operations...................... (1,826,978) -- (1,826,978)
------------ ------------ ------------
Discontinued operations:
Operating loss from discontinued operations.............. (1,142,275) 1,142,275 (6) --
Gain on disposal of discontinued operations ............. -- 142,350 (5) 142,350
------------ ------------ ------------
Net loss from discontinued operations ................... (1,142,275) 1,284,625 142,350
------------ ------------ ------------
Net loss .................................................. $ (2,969,253) $ 1,284,625 $ (1,684,628)
============ ============ ============
Loss per common share, basic and diluted:
Continuing operations ............................... $ (0.03) $ (0.03)
Discontinued operations ............................. (0.02) 0.00
------------ ------------
$ (0.05) $ (0.03)
============ ============
Weighted average number of shares
outstanding - basic and diluted.......................... 71,481,165 71,481,165
============ ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
16
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 2007
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents ............................................. $ 141,691 $ 50,000 (7) $ 191,691
Prepaid expenses and other current assets ............................. 115,101 (104,952)(8) 10,149
Prepaid commissions ................................................... 117,346 -- 117,346
------------ ------------ ------------
Total current assets ............................................. 374,138 (54,952) 319,186
Property and equipment (net of accumulated depreciation
of $22,477) ........................................................... 203,322 (193,541)(8) 9,781
Deposits and other assets .................................................. 25,619 (6,450)(8) 19,169
Investment in joint venture ................................................ 10,000 (10,000)(8) --
Investment in IUTM ......................................................... -- 367,275 (9) 367,275
------------ ------------ ------------
Total assets ................................................ $ 613,079 $ 102,332 $ 715,411
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Convertible notes payable (net of discount of $349,857) ............... $ 850,143 $ -- $ 850,143
Convertible notes payable related parties ............................ 280,450 -- 280,450
Notes payable related parties ........................................ 600,000 -- 600,000
Accounts payable and other accrued expenses ........................... 86,339 (40,018)(10) 46,321
Accrued interest payable .............................................. 132,921 -- 132,921
------------ ------------ ------------
Total current liabilities ........................................ 1,949,853 (40,018) 1,909,835
Convertible notes payable (net of discount of $606,585) .................... 688,415 -- 688,415
Total liabilities ........................................... 2,638,268 (40,018) 2,598,250
Stockholders' Deficit:
Preferred stock, par value $.001 per share; 10,000,000 shares
authorized 443,162 shares issued and outstanding at
August 31, 2007 .................................................. 443 -- 443
Common stock, par value $.001 per share; 200,000,000 shares authorized;
93,357,986 shares issued at August 31, 2007; 70,975,616
shares outstanding at August 31, 2007 ............................ 70,976 -- 70,976
Additional paid-in capital ............................................ 47,805,282 -- 47,805,282
Accumulated deficit ................................................... (49,908,557) 142,350 (11) (49,766,207)
Common stock subscribed, underlying common shares of 22,689 ........... 6,667 -- 6,667
------------ ------------ ------------
Total stockholders' deficit ................................. (2,025,189) 142,350 (1,882,839)
------------ ------------ ------------
Total liabilities and stockholders' deficit ................. $ 613,079 $ 102,332 $ 715,411
============ ============ ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
17
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2007
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
Operating expenses:
General and administrative .............................. $ 1,269,802 $ (484,080)(12) $ 785,722
Research and development ................................ 4,961,531 (4,961,531)(12) --
Depreciation and amortization ........................... 20,914 (18,256)(12) 2,658
------------ ------------ ------------
Total operating expenses ................................ 6,252,247 (5,463,867) 788,380
------------ ------------ ------------
Loss from operations .................................... (6,252,247) 5,463,867 (788,380)
------------ ------------ ------------
Other income (expense):
Interest income ......................................... 10,824 (10,078)(12) 746
Interest and finance charges ............................ (1,321,941) 10,864 (12) (1,311,077)
Other income (expense) .................................. 10,409 (46)(12) 10,363
------------ ------------ ------------
Total other income (expense) ............................ (1,300,708) 740 (1,299,968)
------------ ------------ ------------
Net loss from continuing operations ..................... (7,552,955) 5,464,607 (2,088,348)
------------ ------------ ------------
Discontinued operations:
Operating loss from discontinued operations ............. (93,178) -- (93,178)
Gain (loss) on disposal of discontinued operations ...... (79) 576,280 (11) 576,201
------------ ------------ ------------
Net loss from discontinued operations ................... (93,257) 576,280 483,023
------------ ------------ ------------
Net loss ................................................. $ (7,646,212) $ 6,040,887 $ (1,605,325)
============ ============ ============
Loss per common share, basic and diluted:
Continuing operations ............................... $ (0.12) $ (0.03)
Discontinued operations ............................. (0.00) 0.01
------------ ------------
$ (0.12) $ (0.02)
============ ============
Weighted average number of shares
outstanding basic and diluted........................... 66,454,700 66,454,700
============= ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
18
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 2006
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents ................................................. $ 365,494 $ 50,000 (13) $ 415,494
Prepaid expenses and other current assets ................................. 10,412 (3,532)(14) 6,880
Notes receivable related parties ......................................... 16,564 -- 16,564
Current assets from discontinued operations ............................... 69,545 -- 69,545
------------ ------------ ------------
Total current assets ................................................. 462,015 46,468 508,483
Property and equipment (net of accumulated depreciation
of $19,820) ............................................................... 26,008 (16,716)(14) 9,292
Deposits and other assets ...................................................... 4,613 (4,613)(14) --
Investment in joint venture .................................................... 10,000 (10,000)(14) --
Investment in IUTM ............................................................. -- 367,275 (15) 367,275
Longterm assets from discontinued operations.................................... 166,319 -- 166,319
------------ ------------ ------------
Total assets .................................................... $ 668,955 $ 382,414 $ 1,051,369
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Convertible notes payable (net of discount of $28,361) .................... $ 521,639 $ -- $ 521,639
Convertible notes payable related parties ................................ 280,450 -- 280,450
Notes payable ............................................................. 130,373 (130,373)(17) --
Accounts payable and other accrued expenses ............................... 247,202 (37,438)(16) 209,764
Accrued interest payable .................................................. 45,419 (26,055)(17) 19,364
Current liabilities from discontinued operations........................... 45,700 -- 45,700
------------ ------------ ------------
Total current liabilities ............................................ 1,270,783 (193,866) 1,076,917
------------ ------------ ------------
Total liabilities ............................................... 1,270,783 (193,866) 1,076,917
------------ ------------ ------------
Stockholders' Deficit:
Preferred stock, par value $.001 per share; 10,000,000 shares authorized
443,162 shares issued and outstanding at August 31, 2006 ............. 443 -- 443
Common stock, par value $.001 per share; 200,000,000 shares authorized;
90,102,953 shares issued at August 31, 2006; 60,259,793 shares
outstanding at August 31, 2006 ....................................... 60,260 -- 60,260
Additional paid-in capital ................................................ 41,599,814 -- 41,599,814
Accumulated deficit ....................................................... (42,262,345) 576,280 (18) (41,686,065)
------------ ------------ ------------
Total stockholders' deficit ..................................... (601,828) 576,280 (25,548)
------------ ------------ ------------
Total liabilities and stockholders' deficit ..................... $ 668,955 $ 382,414 $ 1,051,369
============ ============ ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
19
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2006
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ ------------
Operating expenses:
General and administrative ................ $ 468,249 $ (39,001)(19) $ 429,248
Research and development .................. 5,334,202 (5,334,202)(19) --
Depreciation and amortization ............. 243 (243)(19) --
------------ ------------ ------------
Total operating expenses .................. 5,802,694 (5,373,446) 429,248
------------ ------------ ------------
Loss from operations ...................... (5,802,694) 5,373,446 (429,248)
------------ ------------ ------------
Other income (expense):
Interest income ........................... 13,700 -- 13,700
Interest and finance charges .............. (53,241) 2,106 (19) (51,135)
Other income (expense) .................... (150) -- (150)
------------ ------------ ------------
Total other income (expense) .............. (39,691) 2,106 (37,585)
------------ ------------ ------------
Net loss from continuing operations ....... (5,842,385) 5,375,552 (466,833)
------------ ------------ ------------
Discontinued operations:
Operating loss from discontinued operations (243,680) -- (243,680)
Loss on disposal of discontinued operations -- (107,013)(20) (107,013)
------------ ------------ ------------
Net loss from discontinued operations ..... (243,680) (107,013) (350,693)
------------ ------------ ------------
Net loss .................................... $ (6,086,065) $ 5,268,539 $ (817,526)
============ ============ ============
Loss per common share, basic and diluted:
Continuing operations ................. $ (0.12) $ (0.01)
Discontinued operations ............... (0.01) (0.01)
------------ ------------
$ (0.13) $ (0.02)
============ ============
Weighted average number of shares
outstanding basic and diluted ............ 47,690,475 47,690,475
============ ============
See accompanying notes and management's assumptions to the unaudited
pro forma condensed consolidated financial information.
20
NOTES AND MANAGEMENT'S ASSUMPTIONS TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
If this transaction closes, the Company plans to seek to obtain marketing rights
to the Oncosphere and possibly other IUTM products and to seek other
opportunities in the medical field. No assurance can be given that such a
transaction will be consummated. The Company's proposed asset sale consists of
the selling of substantially all the assets, and related liabilities, related to
the Oncosphere project, which are currently held in the Company's subsidiary,
Oncologix Corporation. Please see the attached unaudited financial statements of
our subsidiary, Oncologix Corporation following these pro forma financial
statements. Included in those assets are prepaid commissions related to debt
financings which are being expensed over the life of the two year notes and
prepaid expenses related to our insurance policies which are being expensed over
twelve months. In addition, the Company will have an investment in IUTM,
representing a 20% equity interest. The value of this interest is 250,000 Euros,
or approximately $367,275 using an exchange rate of 1.4691 on August 18, 2008.
This value was calculated based on the 500,000 Euro investment by IUT in IUTM in
consideration of a 40% interest. Other assets retained include modest furniture
and computer equipment used to maintain the Company's records. All liabilities
of the Company's subsidiary, Oncologix Corporation will be assumed by the Buyer
under the terms of the asset sale. The Company's remaining liabilities will
consist primarily of convertible notes payable, as well as outstanding legal and
professional fees.
The following is a description of the unaudited pro forma adjustments to the
Registrant's historical condensed consolidated financial statements.
(1) Reflects the receipt of $50,000 cash in connection with the sale of
the Oncosphere assets if the transaction was consummated on May 31,
2008.
(2) Reflects the disposal of assets, which are held in the Company's
subsidiary, Oncologix Corporation, currently classified as current and
long term assets from discontinued operations in connection with the
transaction of the Oncosphere assets if the transaction was
consummated on May 31, 2008.
(3) Reflects the estimated value of the investment in 20% of IUTM received
in connection with the sale of the Oncosphere assets as if the
transaction was consummated on May 31, 2008.
(4) Reflects the assumption of liabilities by IUT, which are held in the
Company's subsidiary Oncologix Corporation, currently classified as
current liabilities from discontinued operations in connection with
the sale of the Oncosphere assets as if the transaction was
consummated on May 31, 2008.
(5) Reflects the gain recognized in connection with the sale of the
Oncosphere assets as if the transaction was consummated on September
1, 2007 for the statement of operations and May 31, 2008 for the
balance sheet.
(6) Reflects the removal of operating loss from discontinued operations,
recorded in the Company's subsidiary Oncologix Corporation, as a
result of the sale as if the transaction was consummated on September
1, 2007.
(7) Reflects the receipt of $50,000 cash in connection with the sale of
the Oncosphere assets as if the transaction was consummated on August
31, 2007.
(8) Reflects the disposal of assets, which are held in the Company's
subsidiary Oncologix Corporation, currently classified as current and
long term assets in connection with the transaction of the Oncosphere
assets as if the transaction was consummated on August 31, 2007.
(9) Reflects the estimated value of the investment in 20% of IUTM received
in connection with the sale of the Oncosphere assets as if the
transaction was consummated on August 31, 2007.
(10) Reflects the assumption of liabilities by IUT, which are held in the
Company's subsidiary, Oncologix Corporation, in connection with the
sale of the Oncosphere assets as if the transaction was consummated on
August 31, 2007.
21
(11) Reflects the gain recognized in connection with the sale of the
Oncosphere assets as if the transaction was consummated on September
1, 2006 for the statement of operations and August 31, 2007 for the
balance sheet.
(12) Reflects the removal of operating loss from continuing operations of
the Company's subsidiary, Oncologix Corporation, as a result of the
sale as if the transaction was consummated on September 1, 2006.
(13) Reflects the receipt of $50,000 cash in connection with the sale of
the Oncosphere assets as if the transaction was consummated on August
31, 2006.
(14) Reflects the disposal of assets, which are held in the Company's
subsidiary Oncologix Corporation, currently classified as current and
long term assets in connection with the transaction of the Oncosphere
assets as if the transaction was consummated on August 31, 2006.
(15) Reflects the estimated value of the investment in 20% of IUTM received
in connection with the sale of the Oncosphere assets as if the
transaction was consummated on August 31, 2006.
(16) Reflects the assumption of liabilities by IUT, which are held in the
Company's subsidiary, Oncologix Corporation, currently classified as
current liabilities in connection with the sale of the Oncosphere
assets as if the transaction was consummated on August 31, 2006.
(17) Reflects the removal of loans assumed upon the merger with JDA Medical
Technologies Inc., which are held in the Company's subsidiary
Oncologix Corporation, as if the transaction was consummated on August
31, 2006.
(18) Reflects the gain recognized in connection with the sale of the
Oncosphere assets as if the transaction was consummated on September
1, 2005 for the statement of operations and August 31, 2006 for the
balance sheet.
(19) Reflects the removal of operating loss from continuting operations of
the Company's subsidiary, Oncologix Corporation, as a result of the
sale as if the transaction was consummated on September 1, 2005.
(20) Reflects the loss recognized in connection with the sale of the
Oncosphere assets as if the transaction was consummated on July 26,
2006 (the date of acquisition of JDA Medical Technologies, Inc.) for
the statement of operations and August 31, 2006 for the balance sheet.
22
Below are financial statements of our wholly owned subsidiary, Oncologix
Corporation as required by Question 6 in Section H of the July 2001 supplement
to the Manual of Publicly Available Telephone Interpretations of the SEC for
guidance.
ONCOLOGIX CORPORATION (A SUBSIDIARY OF ONCOLOGIX TECH, INC.)
UNAUDITED CONDENSED BALANCE SHEETS AS OF
May 31, August 31, August 31,
2008 2007 2006
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents .................................................. $ 171 $ 77,029 $ 301,445
Prepaid expenses and other current assets .................................. 70 104,952 3,532
Notes receivable related parties .......................................... -- -- 16,564
Intercompany receivable .................................................... 1,716 -- 1,792
------------ ------------ ------------
Total current assets .................................................. 1,957 181,981 323,333
Property and equipment (net of accumulated depreciation
of $45,243, $18,372 and $243) .............................................. 151,272 193,541 16,716
Deposits and other assets ....................................................... 2,262 6,450 4,613
Investment in joint venture ..................................................... 10,000 10,000 10,000
------------ ------------ ------------
Total assets ..................................................... $ 165,491 $ 391,972 $ 354,662
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable .............................................................. $ -- $ -- $ 130,373
Accounts payable and other accrued expenses ................................ 202,484 40,018 37,438
Accrued interest payable ................................................... -- -- 26,055
Intercompany payable ....................................................... -- 8,322 9,912
------------ ------------ ------------
Total current liabilities .............................................. 202,484 48,340 203,778
------------ ------------ ------------
Total liabilities ................................................ 202,484 48,340 203,778
------------ ------------ ------------
Stockholders' Deficit:
Common stock, par value $.001 per share; 10,000,000 shares authorized;
1,000 shares issued and outstanding at May 31, 2008,
August 31, 2007 and August 31, 2006, respectively .................... 1,000 1,000 1,000
Additional paid-in capital ................................................. 11,944,441 11,182,791 5,525,436
Accumulated deficit during the development stage............................ (11,982,434) (10,840,159) (5,375,552)
------------ ------------ ------------
Total stockholders' deficit ...................................... (36,993) 343,632 150,884
------------ ------------ ------------
Total liabilities and stockholders' deficit ...................... $ 165,491 $ 391,972 $ 354,662
============ ============ ============
23
ONCOLOGIX CORPORATION (A SUBSIDIARY OF ONCOLOGIX TECH, INC.)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Nine For the For the
Months Ended Year Ended Year Ended
May 31, August 31, August 31,
2008 2007 2006
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Operating expenses:
General and administrative ............. $ 128,206 $ 484,080 $ 39,001
Research and development ............... 971,648 4,961,531 5,334,202
Depreciation and amortization .......... 29,914 18,256 243
----------- ----------- -----------
Total operating expenses ............... 1,129,768 5,463,867 5,373,446
----------- ----------- -----------
Loss from operations ................... (1,129,768) (5,463,867) (5,373,446)
----------- ----------- -----------
Other income (expense):
Interest income ........................ 270 10,078 --
Interest and finance charges ........... -- (10,864) (2,106)
Gain (loss) on disposal of assets ...... (13,890) 128 --
Other income (expense) ................. 1,113 (82) --
----------- ----------- -----------
Total other income (expense) ........... (12,507) (740) (2,106)
----------- ----------- -----------
Net loss ................................. $(1,142,275) $(5,464,607) $(5,375,552)
=========== =========== ===========
24
PROPOSAL NO. 2
TO AMEND THE ARTICLES OF INCORPORATION OF THIS CORPORATION TO AUTHORIZE
AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK, $0.001 PAR VALUE,
FROM 200,000,000 SHARES TO 500,000,000 SHARES AND THE NUMBER OF PREFERRED
SHARES FROM 10,000,000 SHARES TO 50,000,000 SHARES
(ITEM 2 ON THE CONSENT CARD)
Regulatory Approval
This Proposal, if approved, will become effective upon our filing a
Certificate of Amendment to our Articles of Incorporation with, and have it
accepted by, the Nevada Secretary of State to amend our Articles of
Incorporation.
Approval Required
On September 2, 2008, the Board of Directors unanimously adopted a
resolution setting forth the proposed terms of the Amendment and declared it
advisable and in the best interests of the Company and its stockholders and
recommended approval by our shareholders. Pursuant to Section 78.390 of the
Nevada Revised Statutes, the Amendment requires the approval of shareholders
holding a majority of the outstanding shares. As of the Record Date, the Common
Stock was the only class of outstanding voting securities. The holders of the
Common Stock are entitled to one vote for each share.
Reason for Proposal
Currently, the Company has 200,000,000 shares of Common Stock authorized,
of which 141,117,314 shares are issued and 118,734,944 shares are outstanding as
of the record date, and 10,000,000 shares of preferred stock authorized, of
which 295,862 shares are issued and outstanding. See the table below for a
further description of our current issued and outstanding common and preferred
stock and shares reserved for issuance under outstanding options, warrants and
other contractual arrangements.
In the judgment of the Board of Directors that number of shares is not
sufficient to permit the Company to raise funds in amount sufficient for its
continued existence or the fulfillment of its future plans. Shareholder consent
to this Amendment is therefore believed to be essential to the Company's future
existence as an operating company. The Board believes that it is advisable and
in the best interests of the Company to have available additional authorized but
unissued shares of Common Stock and preferred stock in amounts adequate to
provide for the Company's future needs as may be determined from time to time in
the exercise of judgment by the Board of Directors. The unissued shares of the
Common Stock and preferred stock will be available for issuance for time to time
as may be deemed advisable or required for various purposes, including the
issuance of shares in connection with financing and acquisitions transactions.
The Board of Directors would be able to authorize the issuance of shares for
these transactions without the necessity, and related costs and delays, of
seeking and obtaining the consent of the shareholders to an increase in the
authorized capital. If, in a particular transaction, shareholder approval were
required by law or otherwise deemed advisable by the Board of Directors, then
the matter would be referred to the shareholders for their approval
notwithstanding that the Company may have requisite number of shares to
consummate the transaction.
Upon issuance, the additional shares of authorized Common Stock would have
rights identical to the currently outstanding shares of Common Stock. Adoption
of the Amendment to our Articles of Incorporation alone, without further action
by the Board of Directors, would not have any immediate dilutive effect on the
proportionate voting power or other rights of existing shareholders.
To the extent that the additional authorized shares of capital stock are
issued in the future, they may decrease existing shareholders' percentage equity
ownership, could be dilutive to the voting rights of existing shareholders and,
depending on the price at which they are issued, have a negative effect on the
market price of the Common Stock. Current shareholders have no preemptive or
similar rights, which means that current shareholders do not have a prior right
to purchase any new issue of capital stock in order to maintain their
proportionate ownership thereof.
25
The Company could also use the additional shares of capital stock for
potential strategic transactions including, among other things, acquisitions,
spin-offs, strategic partnerships, joint ventures, restructurings, divestitures,
business combinations and investments, although the Company has no present plans
to do so. The Company cannot provide assurances that any such transactions will
be consummated on favorable terms or at all, that they will enhance stockholder
value or that they will not adversely affect the Company's business or the
trading price of the Common Stock. Any such transactions may require the Company
to incur non-recurring or other charges and may pose significant integration
challenges and/or management and business disruptions, any of which could
materially and adversely affect the Company's business and financial results.
The increase in the number of shares of preferred stock authorized provides
the Company with increased financial flexibility in meeting future capital
requirements by providing more shares of another type of security in addition to
Common Stock, as it will allow preferred stock to be available for issuance from
time to time and with such features as determined by the Board of Directors for
any proper corporate purpose. It is anticipated that such purposes may include
exchanging preferred stock for Common Stock and, without limitation, may include
the issuance for cash as a means of obtaining capital for use by the Company, or
issuance as part or all of the consideration required to be paid by the Company
for acquisitions of other businesses or assets.
The Board of Directors' authority to establish the rights and preferences
of any series of preferred stock prior to the issuance of any such series and to
issue preferred stock in one or more series, without further approval of
shareholders of the Company, remains unchanged. The Board of Directors would be
required to make any determination to issue shares of preferred stock based on
its judgment as to the best interest of the Company and its shareholders. The
Board of Directors believes that if an increase in the authorized number of
shares of preferred stock were to be postponed until a specific need arose, the
delay and expense incident to obtaining the approval of the Company's
shareholders at that time could significantly impair its ability to meet
financing requirements or other purposes.
The Amendment is not intended to have any anti-takeover effect and is not
part of any series of anti-takeover measures contained in any agreement or the
Articles of Incorporation or the Bylaws of the Company. However, the Company's
shareholders should note that the availability of additional authorized and
unissued shares of capital stock could make any attempt to gain control of the
Company or the Board of Directors more difficult or time consuming. The Company
could use the additional shares to oppose a hostile takeover attempt or delay or
prevent changes in control or management of the Company. Although this proposal
to increase the authorized number of shares of capital stock has been prompted
by business and financial considerations and not by the threat of any known or
threatened hostile takeover attempt, shareholders should be aware that approval
of this proposal could facilitate future efforts by the Company to oppose
changes in control of the Company and perpetuate the Company's management,
including transactions in which the shareholders might otherwise receive a
premium for their shares over then current market prices.
The Company has no current plans, proposals or arrangements to issue any
shares of its Common Stock or preferred stock, other than the issuance of
2,000,000 shares of Common Stock to the University of Maryland as discussed
previously.
Consequences of Failure of Approval
If this Proposal is not approved, we expect to be severely hindered in any
effort to raise additional funds or acquire any other business or assets.
26
Below is a chart listing the current issued and outstanding common and preferred
stock along with those shares currently available for issuance, as well as those
shares available if this proposal is approved.
Common Stock Prior to Increase After Increase
in Authorized in Authorized
Common Stock Authorized 200,000,000 500,000,000
Shares Issued 141,117,314 141,117,314
Outstanding Stock Options (1) 4,443,526 4,443,526
Outstanding Warrants (1) 5,899,159 5,899,159
Common shares underlying
convertible preferreds 591,724 591,724
Common shares underlying
convertible notes (1) 9,726,895 9,726,895
--------------------- ---------------------
Total Shares Issued 161,778,618 161,778,618
Less shares in Escrow 22,382,370 22,382,370
--------------------- ---------------------
Diluted Shares Outstanding 139,396,248 139,396,248
===================== =====================
Available Common Shares 60,603,752 360,603,752
===================== =====================
(1) As of October 15, 2008 all options, warrants and convertible notes
are exercisable at prices higher that the current trading price.
Preferred Stock
Preferred Stock Authorized 10,000,000 50,000,000
Outstanding Preferred Shares 295,862 295,862
===================== =====================
Available Preferred Shares 9,704,138 49,704,138
===================== =====================
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS CONSENT TO
THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO
AUTHORIZE AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK, $0.001 PAR
VALUE, FROM 200,000,000 SHARES TO 500,000,000 SHARES AND THE NUMBER
OF PREFERRED SHARES FROM 10,000,000 SHARES TO 50,000,000 SHARES
27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner (2) of Beneficial Owner (1) of Class (1)
- -------------- ----------------------- ----------------------- ------------
Common Stock Judy Lindstrom 113,333 (3) 0.10%
Common Stock Michael Kramarz 255,000 (4) 0.21%
Common Stock Barry Griffith 499,000 (5) 0.42%
Common Stock Steven Kurtzman, MD 413,333 (6) 0.35%
Common Stock Anthony Silverman 25,520,331 (7) 21.40%
7625 E Via Del Reposo
Scottsdale, AZ 85258
Common Stock Mountainview Opportunistic Growth Fund LP. 10,736,745 (8) 9.04%
Attn: Andrew Ecclestone
77 Bloor Street W., 3rd Floor
Toronto, Ontario M4Y 2T1
Common Stock Michele De Gregorio, MD 8,361,369 (9) 7.04%
4550 Northridge Court
West Bloomfield, MI 48323
Common Stock Andrew Kennedy, MD 13,949,738 (10) 11.75%
307 Devonhall Lane
Cary, NC 27518
Common Stock Jeff Franco 13,949,738 (11) 11.75%
6501 Autumn Wind Circle
Clarksville, MD 21029
Common Stock All directors and executive officers 1,280,666 1.07%
as a group
- ------------------------------------------
1) A person is deemed to be the beneficial owner of securities that can
be acquired within 60 days from the date set forth above through the
exercise of any option, warrant or right. Shares of Common Stock
subject to options, warrants or rights that are currently exercisable
or exercisable within 60 days are deemed outstanding for computing the
percentage of the person holding such options, warrants or rights, but
are not deemed outstanding for computing the percentage of any other
person. The amounts and percentages are based upon 118,734,944 shares
of Common Stock outstanding as of the Record Date.
2) Unless otherwise noted, the address of each of the beneficial owners
is P.O. Box 8832, Grand Rapids, MI 49518-8832.
3) Includes 113,333 shares subject to vested options.
4) Includes 255,000 shares subject to vested options.
5) Includes 490,000 shares subject to vested options and 9,000 shares of
stock underlying units held.
6) Includes 413,333 shares subject to vested options.
28
7) Includes 70,000 shares subject to vested options, direct ownership of
22,986,852 shares, direct ownership of 425,479 shares issuable upon
conversion of two promissory notes and 1,998,000 shares and 40,000
warrants to purchase shares owned by Katsinam Partners, LP, of which
Mr. Silverman is the holder of a 17.64% limited partnership interest
and is the General Partner with sole power to vote such shares.
8) Includes direct ownership of 10,736,745 shares of common stock. Andrew
Ecclestone is the General Partner with the power to vote such shares.
9) Includes direct ownership of 8,361,369 shares of common stock.
10) Includes direct ownership of 13,949,738 shares, of which 8,369,842 are
subject to an escrow agreement.
11) Includes direct ownership of 13,949,738 shares, of which 8,369,842 are
subject to an escrow agreement.
FORWARD LOOKING STATEMENTS
This Proxy Statement contains certain statements that are not descriptions
of historical facts, are forward-looking statements within the meaning of the
safe harbor provisions of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements relate to future events, including the future financial performance
of Oncologix. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue," or the negative
of such terms and other comparable terminology. These statements reflect the
Company's expectations and estimates as of the date of this Proxy Statement.
Consequently, actual results may differ materially from those projected in the
forward-looking statements. In evaluating those statements, you should
specifically consider various factors, including the risks, uncertainties and
other matters discussed under "CAUTION" and elsewhere in the Company's Annual
Report on Form 10-KSB for the fiscal year ended August 31, 2007 and in other
periodic reports filed with the U.S. Securities and Exchange Commission. These
factors may cause actual results to differ materially from any forward-looking
statements. Oncologix is not undertaking any obligation to update any
forward-looking statements contained in this Proxy Statement.
DATED: October 27, 2008
By Order of the Board of Directors
/s/ Michael Kramarz
- --------------------------------------
Michael Kramarz, Secretary
29
IUT/Oncologix Asset Purchase Agreement
EXHIBIT A
ASSET PURCHASE AGREEMENT
The parties to this ASSET PURCHASE AGREEMENT, dated as of August 18, 2008 ("this
Agreement"), are Oncologix Tech, Inc. a Nevada corporation ("Oncologix") and
Institut fur Umwelttechnologien GmbH, a German Company ("IUT"). The parties have
agreed as hereinbelow provided.
RECITALS
1.1 Background.
As used in this Agreement, "Oncologix" includes Oncologix Corporation, a Nevada
corporation that is the wholly owned subsidiary of Oncologix. Oncologix agrees
that whenever necessary it will cause Oncologix Corporation to act to fulfill
the obligations of Oncologix under this Agreement. Oncologix has heretofore
conducted a medical device business whose activities, to the extent material to
this Agreement, have been related to the development and testing of a certain
microsphere device called the "Oncosphere". The Oncosphere embodies technology
owned by the University of Maryland and licensed to Oncologix pursuant to a
certain Master License Agreement, a copy of which has heretofore been delivered
to IUT, and certain proprietary improvements, modifications and additional
technology developed by Oncologix.
1.2 Purpose of this Agreement.
IUT wishes to purchase all of the assets, including without limitation the
rights of Oncologix under the Master License Agreement, and assume all of the
liabilities of Oncologix that are related to the Oncosphere, including the
obligations of Oncologix under the Master License Agreement, and Oncologix
wishes to sell such assets and assign its rights under the Master License
Agreement to IUT pursuant to the terms and conditions of this Agreement.
THE TRANSACTION
2.1 Purchase and Sale of Assets.
Upon and subject to the terms and conditions hereof, Oncologix shall sell and
IUT shall purchase and acquire from Oncologix, all right, title and interest in
and to the assets (the "Assets") listed and described on Schedule 2.1, in each
case subject to all liens, charges, security interests, restrictions and other
encumbrances arising out of the Assumed Liabilities (hereinbelow defined), and
will apply them to the continued development and commercialization of the
Oncosphere as described in IUT's business plan dated May 29, 2008 (the "Business
Plan"), a copy of which has heretofore been delivered to Oncologix.
2.2 Assumption of Specified Liabilities.
At the Closing (hereinbelow defined), IUT shall agree to assume and perform
after the Closing when and as they become due the liabilities of Oncologix that
are listed and described on Schedule 2.2 (the "Assumed Liabilities") and no
others.
2.3 Formation of New Entity by IUT.
Without limiting any of the obligations of IUT under this Agreement, it is
understood that for the purposes of implementing its performance of such
obligations it will form, under German law, a new Gesellschaft mit beschranker
Haftung called "IUT Medical Gmbh" (hereinafter "IUTM") or, if that name is not
available, such other name as IUT may determine in its reasonable discretion, to
hold the Assets and to complete the development and commercialization of the
1
IUT/Oncologix Asset Purchase Agreement
Oncosphere and other radiation-based medical products as the occasion may arise,
as described in the Business Plan (hereinabove defined). As of the Closing the
Articles of Association (Gesellschaftsvertrages) and the financial condition of
IUTM shall conform to the description thereof set forth in Article 3 of this
Agreement.
2.4 Consideration.
As consideration for the sale of the Assets by Oncologix to IUT, IUT shall at
the Closing: Pay to Oncologix in cash the sum of $50,000; Assume, discharge and
hold Oncologix harmless from the Assumed Liabilities; and Cause IUTM to issue
and sell to Oncologix, in consideration of this Agreement, not less than twenty
percent (20%) of the duly and validly issued voting equity membership interest
of IUTM, fully paid and non-assessable, such issuance to be evidenced by the
delivery to Oncologix a certificate in a form which shall be reasonably
acceptable to counsel to Oncologix.
2.5 Closing.
The Closing shall occur at the offices of Firetag, Stoss & Dowdell, P.C., 1747
East Morten Avenue, Suite 107, Phoenix, AZ 85020 at 10:00 a.m. on the date on
which all necessary consents to the consummation of this Agreement shall be
obtained (the "Closing Date") or on such other date or at such other location(s)
or starting at such other time as the parties shall agree. At the Closing, each
of the parties shall execute and deliver such further agreements or instruments
as the other party shall reasonably request including without limitation the
deliveries specified in this Agreement.
3. ORGANIZATION, FINANCING AND OPERATION OF IUTM
The provisions of this Article 3 reflect the intention of the parties to this
Agreement with respect to the formation, organization and operation of IUTM and
all of the organization documents of IUTM shall be interpreted so as to be
consistent with these provisions. In the event of any apparent conflict between
such organization documents and this Article 3, the provisions of this Article
shall govern.
3.1 Business Purpose of IUTM.
The business purpose of IUTM shall be to continue the development and
commercialization of the Oncosphere product as described in the Business Plan
and to acquire, develop and commercialize additional products involving the use
of radiation for medical purposes.
3.2. Units of Ownership Interests.
(a) The ownership interest in IUTM shall be divided into five (5) equal
ownership units ("Units"), each representing twenty percent (20%) of the total
ownership interest. When duly issued in accordance with Article 3 of this
Agreement, each Unit shall be fully paid and non-assessable. The voting power of
IUTM shall be allocated among the owners of IUT in proportion to their
respective ownership interests; that is, the holder of each Unit shall have
twenty percent (20%) of the total voting power of IUTM. Upon any dissolution or
liquidation of IUTM, the assets of IUTM shall be distributed among the owners in
proportion to the number of Units held by each. The vote of 75% of the ownership
interest shall be required for a decision to sell IUTM or substantially all of
its assets.
2
IUT/Oncologix Asset Purchase Agreement
3.3 Issuance and Reservation of Units.
The Units shall be issued or reserved for issuance as follows:
Two Units (a 40% interest) shall be issued and sold to IUT in
consideration of its capital contribution of (euro)500,000 to be available
for the operating expenses of IUTM and IUT's agreement to perform as
further provided in Article 3 and elsewhere in this Agreement;
One Unit (a 20% interest) shall be issued and sold to Oncologix in
consideration of its agreement to enter into and perform under this
Agreement; and
Two Units (a 40% interest in the aggregate) shall be reserved for
issuance and sale to future investors in IUTM and/or as compensation to key
employees, consultants, suppliers and the like as may be determined from
time to time by the members (shareholders) of IUTM.
3.4 Performance by IUT.
In further consideration of the issuance of Units to Oncologix as provided above
and of its entry into this Agreement, IUT, will (i) at its sole expense,
organize IUTM, select and recruit its personnel, (ii) furnish IUTM, at IUT's
cost therefor, with the facilities necessary and appropriate to the conduct of
business by IUTM as described in the Business Plan, (iii) sell raw materials to
IUTM at a price equal to its own direct manufacturing and overhead costs, (iv)
make available to IUTM intellectual property owned by or licensed to IUT
necessary or useful in the conduct of business by IUTM, (v) the use of IUT's
licenses and permits necessary for the handling and processing of radioactive
materials and (vi) grant to IUTM the right to act as the exclusive worldwide
distributor of IUT's Yttrium90 (Y90)-based products to customers in the medical
device industry.
3.5 Royalty.
In further consideration for its entry into and performance under this
Agreement, Oncologix will have the right to a royalty equal to three percent
(3%) of the total Net Sales of IUTM. As used herein, "Net Sales" shall mean the
gross sales revenues and fees received by IUTM or an Affiliate for any products
or services, less the sum of the following: customary trade, quantity and cash
discounts actually allowed and taken; sales or use taxes, excise taxes and
customs duties and other governmental charges included in the invoiced amount;
outbound transportation, shipping and insurance, prepaid or allowed, if
separately itemized on the invoice to the customer; and amounts actually allowed
or credited on returns or rejections of products or services or billing errors.
Net Sales does not include any resales of products after sale by IUTM or an
Affiliate to a third party purchaser. In computing Net Sales, (i) no deductions
from gross revenues and fees will be made for commissions paid to individuals,
whether they be with independent sales agents or regularly employed on the
payroll by IUTM or its Affiliate(s) or for cost of collections, and (ii)
products and services will be considered sold when billed or invoiced, whichever
is first. As used herein, "Affiliate" means any entity which directly or
indirectly controls, is controlled by, or is under common control with IUTM.
"Control" means the right to exercise more than 50% of the voting rights of a
controlled corporation, limited liability company, or partnership, or other
entity or the power to direct or cause the direction of the management or
policies of any other controlled entity.
3.6 Royalty Payments and Reports.
The royalty specified above shall be paid in cash on a quarterly basis. Payments
shall be due and payable twenty (20) days after the fiscal quarter of IUTM
during which such royalty accrued. Each payment shall be accompanied by a
written report, certified as correct by the Chief Executive Officer and Chief
Financial Officer of IUTM, stating the amount of Net Sales, by product if
payable on the Net Sales of more than one product, during such quarter and the
calculation by which the amount of royalty payments were determined.
3
IUT/Oncologix Asset Purchase Agreement
3.7 Transferability of Units.
An owner may sell or otherwise transfer Units provided that IUTM and the then
other owners will have the right to purchase such interest at the price and
under the terms offered by a bona fide third party. In the event of the death,
insolvency or liquidation of an owner, IUTM has the right to purchase the
interest of such owner at its then fair value. In the event of a dispute as to
such value, the matter shall be resolved in accordance with the arbitration
provisions of this Agreement.
3.8 Co-Sale.
If IUT should determine to sell or otherwise dispose of all or any part of to
sell all or any part of its interest in IUTM (other than sales or other
dispositions to its Affiliates), it shall (i) give Oncologix prompt notice of
such determination and (ii) at least twenty five (25) business days before
entering into a proposed binding agreement for such sale or other disposition,
deliver a copy of such binding agreement to Oncologix. Oncologix shall have
twenty (20) business days after its receipt thereof to elect, by providing
written notice to the IUT, to require the purchaser of the IUT's interest to
purchase a percentage of Oncologix's interest (determined as set forth below) in
IUTM on the same terms and conditions (including, without limitation, the same
purchase price per percentage point of ownership interest in IUTM) set forth in
the agreement between the IUT and the purchaser ("Co-Sale Rights"). For purposes
of the preceding sentence, in connection with any proposed sale, Oncologix may
exercise Co-Sale Rights with respect to the same percentage of its ownership
interest as IUT's ownership interest to be sold in the contemplated transfer
(e.g., if IUT has a 40% Sharing Ratio and is selling all of its owner interest,
100% of IUT's membership interest, is being sold, then Oncologix is entitled to
sell all (100%) of its ownership interest. If the payment for IUT's interest
includes consideration other than cash, IUT, Oncologix and the purchaser shall
agree upon the cash value of the sale and all consideration paid from the
purchaser to the Oncologix for Oncologix's interest shall be in cash. Any
disagreement between IUT and Oncologix concerning the cash value of the sale
shall be resolved in accordance with the arbitration provisions of this
Agreement. In the event Oncologix elects to exercise its Co-Sale Rights pursuant
to this Section 3.8, and the purchaser refuses to purchase Oncologix's interest
in IUTM as provided above, IUT shall not sell its interest to the purchaser
without the written consent of Oncologix, which consent may be withheld in the
sole discretion of Oncologix.
3.9 Information and Reports.
Each owner shall be entitled to receive the annual financial statements of IUTM,
certified as correct by an independent accountant in the manner customary under
German practice and such further information as such owner may from time to time
reasonably request. It is understood that financial information of IUTM is
expected to be material to Oncologix's own financial reports to its shareholders
and to government agencies.
3.9 Records.
IUT shall keep true and accurate books of account and records sufficient to
determine and establish the royalties payable to Oncologix under the Agreement
and compliance with the other terms and conditions of this Agreement. Such books
and records shall be kept reasonably accessible for three (3) years following
the end of the calendar quarter to which they pertain and shall be made
available for inspection throughout such three (3) year period by an independent
third party auditor selected by Oncologix for such purposes in accordance with
Section 3.10, below.
4
IUT/Oncologix Asset Purchase Agreement
3.10 Audits.
Upon the written request of Oncologix and not more than once in each calendar
year, IUT and IUTM shall permit an independent certified public accounting firm
(or other auditor in the case of audits for compliance with license
restrictions) of an internationally recognized standing selected by Oncologix
and reasonably acceptable to IUT and IUTM, at Oncologix's expense, to have
access during normal business hours, and upon reasonable prior written notice,
to those records of IUTM as may be reasonably necessary to verify the accuracy
of any financial reports to Oncologix with respect to the preceding three (3)
years. The auditor shall have the right to inspect all agreements and other
documents relevant to confirm compliance with the royalty provisions of the
Agreement. The accounting firm or auditor will disclose to Oncologix whether the
reports are correct or incorrect and, if incorrect, the amount by which the
reports reveal any underpayment to Oncologix and the reason for such
underpayment. If the accounting firm or other auditor believes IUTM has not
complied with the Agreement, the auditor will so notify IUTM in writing and the
auditor will discuss the matter with IUTM in good faith for sixty (60) days
after receipt of such notice. If the auditor remains convinced that IUTM has not
complied with the royalty provisions of the Agreement, after such discussion,
and IUTM has not agreed to take action which the auditor agrees would remedy
such noncompliance, then the auditor shall disclose to Oncologix the financial
terms of the agreements between IUTM and the non-Affiliate third parties which
are material to such noncompliance. The parties shall resolve any dispute in
accordance with the arbitration provisions of this Agreement.
3.11. Additional Payments; Cost Reimbursement.
If such accounting firm concludes that additional payments were owed to
Oncologix by IUTM during such period, then IUTM shall pay the additional
payments, with interest from the date originally due at an amount equal to the
lesser of the prime rate plus two percent (2%), as published in The Wall Street
Journal, Eastern U.S. Edition, on the last business day preceding such date, or
the maximum amount permitted by applicable law, within thirty (30) days after
the date Oncologix delivers to IUTM such accounting firm's written report unless
the additional payment is disputed by IUTM. If the amount of the underpayment
during any period one (1) year period is greater than ten percent (10%) of the
total amount owed for that year and greater than Ten Thousand United States
Dollars ($10,000), then IUTM shall, in addition, reimburse Oncologix for its
reasonable costs related to such audit.
3.12 Financial Condition of IUTM.
At the Closing, the assets of IUTM shall consist of the Assets acquired pursuant
to this Agreement together with (euro)500,000 and IUTM
shall have no liabilities.
4. REPRESENTATIONS AND WARRANTIES OF ONCOLOGIX
Oncologix represents and warrants to IUT that:
4.1 Organization.
Oncologix is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and qualified to do business as a foreign
corporation in each jurisdiction in which failure to do so would have a
materially adverse effect on their business and assets.
4.2 Authority for Transaction.
Subject to the due approval of its shareholders as provided by law, Oncologix
has the full right, power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform Oncologix's
obligations hereunder, and to carry out the transactions contemplated in this
Agreement, except as may be limited by bankruptcy, insolvency, reorganization,
5
IUT/Oncologix Asset Purchase Agreement
moratorium or other similar laws affecting creditors' rights generally. When
duly approved by its shareholders, this Agreement will constitute the valid and
legally binding obligation of Oncologix, enforceable in accordance with its
terms and conditions.
4.3 No Violation or Conflict.
Except as otherwise disclosed on Schedule 4.3 hereto, neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
Article 2 above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Oncologix is subject or any
provision of the Articles of Incorporation or By-laws of Oncologix.
4.4 Broker's Fees
Oncologix has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement for which IUT could become liable or obligated.
4.5 No Litigation.
There are no actions, suits or proceedings pending, or, to the knowledge of
Oncologix, threatened or anticipated before any court or governmental or
administrative body or agency affecting the Assets, except as set forth on
Schedule 4.5 hereto. Oncologix is not presently subject to any injunction, order
or other decree of any court of competent jurisdiction which affects the Assets.
5. REPRESENTATIONS AND WARRANTIES OF IUT
IUT represents and warrants to Oncologix that:
5.1 Organization.
At the date of this Agreement IUT is and will be at the Closing a Gesellschaft
mit beschranker Haftung validly existing and in good standing under the laws of
Germany and IUTM will at the Closing be a Gesellschaft mit beschranker Haftung,
validly existing and in good standing under the laws of Germany and the above
described Articles of Association or their equivalent under German law.
5.2 Authority
IUT has the full right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, IUT's Board of Managers has duly authorized the
execution, delivery, and performance of this Agreement by IUT. The Agreement
constitutes the valid and legally binding obligation of IUT, enforceable in
accordance with its terms and conditions, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally.
5.3 No Violation or Conflict.
Neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby (including without limitation the
provisions of Article 3, above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which IUT is
subject or any provision of the IUT's Operating Agreement or Oncosphere Gmbh's
Articles of Incorporation or Bylaws or their equivalent under German law, or
(ii) conflict with, result in a breach or constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
6
IUT/Oncologix Asset Purchase Agreement
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which IUT is a party or by which it
is bound or to which any of its assets is subject, except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice, would not have a Material adverse
effect on the financial condition of IUT taken as a whole or on the ability of
the parties to consummate the transactions contemplated by this Agreement.
5.4 No Litigation.
There are no actions, suits or proceedings pending, or to IUT's knowledge,
threatened or anticipated before any court or governmental or administrative
body or agency affecting IUT, its property, or its ability to consummate the
transaction contemplated by this Agreement.
5.5 Broker's Fees.
IUT has no liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement
for which Oncologix could become liable or obligated.
5.6 Accuracy of Representations or Warranties.
All of IUT's warranties and representations as hereinabove stated shall be true
on the Closing Date and the same shall survive the Closing and be deemed
incorporated, whether explicitly stated therein or not, into all documents or
other instruments delivered by IUT to Oncologix at the Closing. No
representation, warranty, or statement of IUT omits or will omit to state any
material fact necessary to make such representation, warranty, or statement in
this Agreement accurate and not misleading in any material respect.
5.7 Acknowledgements.
IUT and certain of its personnel were, during the period from approximately
October 2006_ until December 31, 2007, engaged by Oncologix as consultants in
the acquisition and use of equipment, conducting development and testing
activities with respect to the Oncosphere. IUT acknowledges that THE ASSETS ARE
BEING SOLD AND DELIVERED TO IUT "AS IS" AND "WHERE IS", and that ONCOLOGIX MAKES
NO WARRANTY WHATSOEVER WITH RESPECT TO THE ASSETS INCLUDING THOSE OF TITLE,
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE.
5.8 Lawful Conduct of Business.
IUT (which includes for all purposes hereof, IUTM), (a) owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, and proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted as described in the Business Plan without any known conflict with, or
infringement of, the rights of others, (b) has conducted, is conducting and will
conduct its business as described in the Business Plan so as to comply in all
material respects with all applicable statutes and regulations and (c) has all
requisite power and authority, and all necessary authorizations, approvals and
orders of and from all governmental regulatory officials and bodies, to own its
properties and conduct its business as now conducted and as proposed to be
conducted as described in the Business Plan.
6. ADDITIONAL COVENANTS
The parties agree as follows with respect to the period after the Closing:
7
IUT/Oncologix Asset Purchase Agreement
6.1 Information Concerning IUT and IUTM.
Without limiting any rights which Oncologix (which term for the purposes of this
paragraph shall include its affiliates, successors or assigns) may have as a
member or shareholder of IUTM, and while Oncologix continues as such member or
shareholder, IUT and IUTM (whichever shall be appropriate) shall promptly
furnish to Oncologix, as it may reasonably request, such information in the
English language, including without limitation financial statements prepared in
accordance with generally accepted accounting principles, as shall be required
to permit Oncologix to report a proper value of its interest in IUTM. IUT
acknowledges (i) that Oncologix is registered with the United States Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934 and is
required to report regularly on its financial condition and prospects, (ii) that
for the foreseeable future its interest in IUTM will be material to its own
financial condition and prospects, (iii) that Oncologix will rely on the
accuracy of information so furnished in preparing and filing reports under that
Act and (iv) that any false or misleading statement in such reports may result
in civil and/or criminal penalties.
6.2 Further Agreements.
The parties will, at the Closing, execute and deliver such additional agreements
as they shall determine with respect to such matters as marketing rights,
royalties, etc. when executed, such additional agreements shall be attached to
this Agreement as Exhibit 6.2.
7. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
The respective obligations of each party to this Agreement to effect the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of the following conditions:
7.1 Shareholder Approval.
This Agreement and the transactions contemplated hereby shall have been duly
approved and adopted by the shareholders of Oncologix.
7.2 No Injunctions or Restraints: Illegality.
No temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transaction, which makes the consummation of the transaction
illegal.
7.3 Additional Conditions to the Obligations of Oncologix.
The obligations of Oncologix to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by Oncologix:
(a) Representations, Warranties and Covenants.
The representations and warranties of IUT in this Agreement shall be true
and correct in all material respects on and as of the Closing as though such
representations and warranties were made on and as of such time and IUT shall
have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by them as of the Closing.
8
IUT/Oncologix Asset Purchase Agreement
(b) Certificate of IUT.
Oncologix shall have been provided with a certificate executed on behalf of
IUT and IUTM by their respective Presidents and Chief Financial Officers or
Treasurers to the effect that, as of the Closing: (i) all representations and
warranties made by IUT under this Agreement are true and complete in all
material respects; (ii) all covenants, obligations and conditions of this
Agreement to be performed by IUT on or before such date have been so performed
in all material respects and that to the best of their knowledge, after having
consulted with legal counsel and auditors, IUTM has been duly organized and
financed as provided in this Agreement and, except as disclosed in Schedule
7.3(b) attached hereto, has sufficient resources to conduct business as
described in the Business Plan.
(c) Satisfactory Form of Legal Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all closing documents and other papers delivered
hereunder shall be reasonably acceptable to counsel to Oncologix.
(d) Legal Opinion.
Oncologix shall have received a legal opinion from counsel to IUT,
satisfactory in form and substance to Oncologix to the effect that IUT has the
full right, power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, that the execution, delivery, and performance
of this Agreement by IUT has been duly authorized by all necessary corporate
action, that this Agreement constitutes the valid and legally binding obligation
of IUT, enforceable in accordance with its terms and conditions, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, and that neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including without limitation the provisions of
Article 3, above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which IUT is subject or any
provision of the IUT's Operating Agreement or Oncosphere Gmbh's Articles of
Incorporation or Bylaws or their equivalent under German law, or (ii) conflict
with, result in a breach or constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which IUT is a party or by which it is bound
or to which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, or
failure to give notice, would not have a material adverse effect on the
financial condition of IUT taken as a whole or on the ability of the parties to
consummate the transactions contemplated by this Agreement.
(f) No Material Adverse Changes.
There shall not have occurred any event, fact or condition that has had or
reasonably would be expected to have a material adverse effect on IUT.
7.4 Additional Conditions to the Obligations of IUT.
The obligations of IUT to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by IUT:
(a) Representations, Warranties and Covenants.
The representations and warranties of Oncologix in this Agreement shall be
true and correct in all material respects on and as of the Closing as though
such representations and warranties were made on and as of such time and
Oncologix shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Closing.
9
IUT/Oncologix Asset Purchase Agreement
(b) License Modification.
The Master License Agreement between Oncologix and the University of
Maryland, Baltimore, originally dated September 16, 2003 and modified by an
Agreement and Consent, dated July 26, 2006, shall have been duly assigned to
IUTM and shall have been modified to the reasonable satisfaction of IUT.
(c) Certificate of Oncologix.
IUT shall have been provided with a certificate executed on behalf of
Oncologix by its President and Chief Financial Officer to the effect that, as of
the Closing: (i) all representations and warranties made by Oncologix under this
Agreement are true and complete in all material respects; and (ii) all
covenants, obligations and conditions of this Agreement to be performed by
Oncologix on or before such date have been so performed in all material
respects.
(e) Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal matters contemplated hereby and
all closing documents and other papers delivered hereunder shall be reasonably
acceptable to the IUT's counsel.
(f) Legal Opinion.
IUT shall have received a legal opinion from legal counsel to Oncologix,
satisfactory in form and substance to IUT to the effect that Oncologix is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and qualified to do business as a foreign corporation in
each jurisdiction in which failure to do so would have a materially adverse
effect on their business and assets, that Oncologix has the full right, power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform Oncologix's obligations hereunder, and to
carry out the transactions contemplated in this Agreement, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and that this Agreement constitutes
the valid and legally binding obligation of Oncologix, enforceable in accordance
with its terms and conditions.
8. GENERAL AND MISCELLANEOUS
8.1 Expenses.
Except as otherwise provided in this Agreement, IUT and Oncologix each agree to
pay, without right of reimbursement from any other, the costs incurred by such
party incident to the preparation and execution of this Agreement and
performance of their respective obligations hereunder, whether or not the
transactions contemplated by this Agreement shall be consummated, including,
without limitation, the fees and disbursements of legal counsel, accountants and
consultants employed by the respective parties in connection with the
transactions contemplated by this Agreement; provided, however, that IUT shall
pay sales and other transfer taxes, if any.
8.2 Assignability.
Neither party may assign or transfer its rights and obligations under this
Agreement without the prior written approval of the other party; provided,
however, Oncologix may assign its rights under this Agreement to an affiliate of
Oncologix or as security to any of its lenders. This Agreement shall inure only
to the benefit of and be binding upon the parties hereto and their respective
successors and representatives and permitted assigns.
10
IUT/Oncologix Asset Purchase Agreement
8.3 Applicable Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and governed by, the laws of the State of Arizona without reference to any
doctrine of the conflict of laws.
8.4 Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed an original, but all of which together shall constitute the same
instrument.
8.5 Entire Agreement.
This Agreement and the agreements, instruments, schedules and other writings
referred to in this Agreement contain the entire understanding of the parties
with respect to the subject matter of this Agreement. There are no restrictions,
agreements, promises, warranties, covenants or undertakings other than those
expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. It may not be amended, changed or terminated orally, and no attempted
change, termination or waiver of any of the provisions hereof shall be binding
unless in writing and signed by the party against whom the amendment, change,
termination or waiver is sought to be enforced.
8.6 Schedules and Exhibits.
Each exhibit hereto shall be attached hereto and shall be considered a part
hereof as if set forth in the body hereof in full.
8.7 Disputes.
Any dispute, disagreement, claim or controversy arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in connection
with, or simultaneously with this Agreement, or any breach of this Agreement
("Dispute") shall be subject to the negotiation, mediation and arbitration
provisions contained herein. Each party to a Dispute shall make every reasonable
effort to meet in person and confer for the purpose of resolving the Dispute by
good faith negotiation before resorting to any legal proceedings or any other
dispute resolution procedure. If the Dispute cannot be settled through
negotiation, the parties shall make every reasonable effort to settle the
Dispute by mediation by a single mediator qualified to consider the matter in
dispute before resorting to any legal proceedings or any other dispute
resolution procedure. If a Dispute cannot be settled through mediation, the
Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona,
under the Rules of Commercial Arbitration of the American Arbitration
Association by a panel of three (3) arbitrators qualified to consider the matter
in dispute. The arbitrators may grant injunctions or other relief in such
dispute or controversy. The decision of a majority of the arbitrators shall be
final, conclusive and binding upon the parties to the arbitration; and any party
shall be entitled to cause judgment on the decision or award of the arbitrators
to be entered in any court of competent jurisdiction. Any party may initiate a
mediation or an arbitration by providing written notice of the mediation or
arbitration, as the case may be (the "Dispute Notice"), to the other parties,
which Dispute Notice shall state the name of initiating party, briefly state the
matter to be mediated or arbitrated, and, if applicable, name a person whom such
party has nominated to act as mediator. If, within thirty (30) days after the
date of the Dispute Notice, the parties have not agreed among themselves as to
the identity of the mediator, then any party may immediately refer this matter
for resolution by the American Arbitration Association. The parties shall each
pay their pro rata share (according to the number of parties involved in the
Dispute) of the costs, deposits and expenses of the mediator. The party
initiating the arbitration shall pay the costs, deposits and expenses of such
arbitration and the prevailing party shall be awarded its attorneys' fees and
expenses in addition to all other relief awarded by the arbitrators, provided
that if the arbitrators determine that a party has initiated an arbitration
without a reasonable basis for doing so, then the arbitrators shall assess
against that party all costs relating to the arbitration, including the
attorneys' fees and expenses of the other parties.
11
IUT/Oncologix Asset Purchase Agreement
8.8 Notices.
All notices, consents, requests, instructions, approvals or other communications
required or permitted to be given hereunder, shall be in writing, addressed as
shown below, or to such other address as any party hereto may, from time to
time, designate in writing, by courier, facsimile (fax) or electronic mail.
Notice may be given via fax, and shall be deemed given when transmission has
been successfully completed and electronic confirmation of such facsimile
transmission is received by the party giving notice. Notices not faxed shall be
deemed given when actually delivered by the courier service. Any notice which is
attempted to be delivered by electronic mail shall not be valid notice
hereunder, unless acknowledgment of receipt of such electronic mail by the
recipient is transmitted to and received by the sender within twenty-four (24)
hours of its delivery.
Oncologix Tech, Inc.
P.O. Box 8832
Grand Rapids, MI 49518-8832
Telephone: (616) 977-9933
Fax: (616) 977-9955
Email: mkramarz@oncologix.biz
With a copy to:
Stephen T. Meadow, Esq.
Firetag, Stoss & Dowdell, P.C.
1747 East Morten Avenue, Suite 107
Phoenix, Arizona 85020
Telephone: (602) 997-1182
Fax: (602) 997-5319
Email: stmeadow@earthlink.net
Institut fur Umwelttechnologien GmbH
Volmerstrasse 7B
D-12489 Berlin HRB 46 572
Germany
Phone: +49 30 6392-5511
Fax: +49 30 6392-4831
Email: j.leonhardt@iut-berlin.com
8.9 Publicity.
The parties shall agree upon the form and substance of (a) a joint press release
or other public announcement of this Agreement and the transactions contemplated
hereby and (b) other matters including related to this Agreement or any of the
transactions contemplated hereby which shall be released on or after the
Closing; provided, however, that nothing in this Agreement shall be deemed to
prohibit any party hereto from making any disclosure which its counsel deems
necessary or advisable in order to fulfill such party's disclosure obligations
imposed by law or contract.
12
IUT/Oncologix Asset Purchase Agreement
8.10 Severability.
If any term, condition or provision of this Agreement shall be declared invalid
or unenforceable, the remainder of the Agreement, other than such term,
condition or provision, shall not be affected thereby and shall remain in full
force and effect and shall be valid and enforceable to the fullest extent
permitted by law.
8.11 Survival of Representations and Warranties.
All covenants, representations and warranties made by the parties in this
Agreement or any certificate or other writing delivered by them or any of their
respective Affiliates pursuant hereto or in connection herewith shall survive
the Closing and any investigation at any time made by or on behalf of the other
party.
8.12 Further Assurances.
From time to time after the Closing, Oncologix will execute and deliver, or
cause its affiliates to execute and deliver, to IUT such instruments of sale,
transfer, conveyance, assignment and delivery, and such consents, assurances,
powers of attorney and other instruments as may be reasonably requested by IUT
or its counsel in order to vest in IUT all right, title and interest of
Oncologix in and to the Assets and otherwise in order to carry out the purpose
and intent of this Agreement.
8.13 Superior Offer.
in the event that Oncologix should receive an unsolicited proposal that its
Board of Directors has in good faith concluded (after consultation with its
legal counsel) that such proposal will lead to a superior offer and that the
failure to consider such proposal would be inconsistent with its fiduciary
obligations under applicable law, Oncologix will be permitted to: (i) furnish
nonpublic information to the third party making such proposal, and (ii) engage
in negotiations with the third party with respect to the proposal. Further, if
after consultation with legal counsel and a financial advisor, the Board of
Directors determines that the proposal constitutes a superior offer, the Board
of Directors will be permitted to withdraw its recommendation to the
stockholders to approve this transaction and enter into an agreement with
respect to the proposal.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be duly
executed as of the day and year first above written.
Institut fur Umwelttechnologien GmbH
By: _______________________________
Its: _______________________________
Attested By: _________________________
Secretary
Oncologix Tech, Inc.
By: _______________________________
Its: President and Chief Executive Officer
Attested By: _________________________
Secretary
13
Schedule 2.1
Asset List
Attached hereto is the list of Assets to be transferred
14
Schedule 2.2
Assumed Liabilities List
Attached hereto is the list of Liabilities to be assumed by IUT.
15
Schedule 4.3
Exceptions to No Violations or Conflicts Representation of Oncologix
None.
16
Schedule 4.4
Exceptions to No Litigation Representation of Oncologix
None.
17
EXHIBIT B
THIS REQUEST FOR WRITTEN CONSENT VIA PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS OF ONCOLOGIX TECH, INC.
WRITTEN CONSENT VIA PROXY IN CONNECTION WITH ACTION
WITHOUT A MEETING OF STOCKHOLDERS
The undersigned shareholder of Oncologix Tech, Inc., a Nevada corporation
(the "Company"), hereby appoints Judy Lindstrom and Michael A. Kramarz, each of
them, proxies and attorneys-in-fact, with full power of substitution, on behalf
and in the name of the undersigned, to execute a written consent under Nevada
Revised Statutes Section 78.320(2) and (3) entitled "Stockholders' Meetings:
Consent for actions taken without a meeting" on the matters set forth below.
1. TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, INCLUDING THE
ASSETS OF ITS WHOLLY-OWNED SUBSIDIARY, TO INSTITUT FUR UMWELTTECHNOLOGIEN GMBH,
A GERMAN COMPANY
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. TO AMEND THE ARTICLES OF INCORPORATION OF THIS CORPORATION TO AUTHORIZE
AN INCREASE THE NUMBER OF SHARES OF COMMON STOCK, $0.001 PAR VALUE, FROM
200,000,000 SHARES TO 500,000,000 SHARES AND THE NUMBER OF PREFERRED SHARES FROM
10,000,000 SHARES TO 50,000,000 SHARES
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Receipt of a Proxy Statement, dated _____________, 2008, related to this
Request for Written Consent Via Proxy is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS ABOVE.
Dated: , 2008
Please sign exactly as your name appears above.
When shares are held in common or in joint
tenancy, both should sign. When signing as
attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, sign in full corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by an
authorized person.
- --------------------------------------------------------------------------------
Page 1
SIGNATURES:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
- --------------------------------------------------------------------------------
Page 2