Healthcare Corporation of America (HCCA) entered into an agreement to acquire Selway Capital Acquisition Corporation (OTCBB: SWCA) in a reverse merger transaction on January 25, 2013. Under the terms of the transaction, Selway Capital Acquisition Corporation will issue 5.2 million of its common shares to Healthcare Corporation of America. Notes with an aggregate principal amount of $10 million will be issued by Selway, with $7.5 million going to HCCA shareholders and $2.5 million going to certain members of the HCCA management team. 1.5 million Selway common shares will be issued as management incentive shares to certain members of the HCCA management team, vesting in three equal installments of 0.5 million in each of September 2013, June 2014 and June 2015. Approximately 0.6 million Selway common shares will be issued to holders of HCCA's preferred stock, and up to approximately 6 additional Selway common shares will be issued to holders of HCCA promissory notes of $6 million at the note holder's election subject to the terms of the notes. HCCA stockholders will also be eligible for earn-out payments of up to 2.8 million Selway common shares issuable upon the combined company achieving certain consolidated gross revenue thresholds. MagnaCare, Inc. will receive warrants to purchase an aggregate of 0.08 million Selway common shares at an exercise price of $7.5 per share in exchange for cancellation of outstanding warrants to purchase up to 2 million HCCA common shares at an exercise price of $1 per share.

For the purpose of the closing payment, an aggregate of 0.52 million shares and promissory notes with an aggregate face value of $0.75 million are being held in escrow for a period of 12 months following the merger in order to satisfy any indemnification obligations of the HCCA. Upon closing, Selway will change its name to HCCA. Either party may terminate the agreement in the event that the merger has not taken place by March 8, 2013.

The agreement provides that, for the two year period following the merger, Gary Sekulski, as the representative of the stockholders of HCCA, will designate three persons to the combined company's Board of Directors, Edmundo Gonzalez, as Selway's representative, will designate one person to the combined company's Board and such designees will unanimously designate three persons to the combined company's Board of Directors pursuant to the terms of a voting agreement to be entered into at closing. The Directors of Selway shall resign at the closing and the Directors of HCCA immediately prior to the effective time shall be the initial Directors of the surviving corporation and shall hold office and the Selway Capital Acquisition Corporation Board shall be composed of the persons described in the Selway Capital Acquisition Corporation voting agreement.

The transaction is subject to HCCA's shareholder approval, holders of less than 10% of HCCA's common stock having exercised their appraisal rights, dissenter's right limited, financial audit of Selway, third party, regulatory approval and execution of registration rights agreement. The transaction has been approved by Board of Directors of HCCA and unanimously approved by the Board of Directors of Selway Capital Acquisition. The transaction has been approved by stockholders of HCCA. The transaction is expected to close on March 8, 2013. Mitchell S. Nussbaum of Loeb & Loeb LLP and Durkin & Durkin, LLP acted as legal advisors for HCCA and Edwin L. Miller of Sullivan & Worcester LLP and Zysman, Aharoni, Gayer & Co. acted as legal advisors for Selway Capital Acquisition Corporation. Chardan Capital Markets LLC acted as financial advisor for Selway Acquisitions and will be paid 5% of all equity consideration issued in the transaction and promissory notes having an aggregate principal amount of 5% of all promissory notes issued in connection with the transaction.