Execution Copy

 

ASSET PURCHASE AGREEMENT

among:

 

ETRANSMEDIA TECHNOLOGY, INC.
a New York corporation,

 

FORMATIV HEALTH MANAGEMENT, INC.
a Delaware corporation

 

ASSOCIATED BILLING SERVICES, LLC

a Delaware limited liability company

 

DOCTORSXL HOLDINGS, LLC

a Delaware limited liability company

 

HARRT ASSOCIATES, LLC

a Delaware limited liability company

 

MEDI BILLING SOLUTION SERVICES, LLC

a Delaware limited liability company

 

MEDI-CLAIM SERVICES, LLC

a Delaware limited liability company

 

MEDIGISTICS, LLC

a Florida limited liability company

 

ARCHIIVUS LLC

a Delaware limited liability company

 

DOCTORSXL, LLC

a Nevada limited liability company

 

ASSOCIATED BILLING SERVICES, INC.

an Arizona corporation

 

MEDI BILLING SOLUTION SERVICES, INC.

a Delaware corporation

 

MEDI-CLAIM SERVICES, INC.

a Delaware corporation

 

MEDIGISTICS, INC.

an Ohio corporation

 

and

MTBC-MED, INC,
a Delaware corporation

 

 

 

Dated on March 27, 2019

 

 

 

 

   

 

 

TABLE OF CONTENTS

 

    Page 1. Sale of Assets; Related Transactions 2         1.1 Purchase and Sale
of the Purchased Assets 2   1.2 Purchase Price 2   1.3 Closing Conditions 2  
1.4 Allocation of Purchase Price 5         2. Representations and Warranties of
the Seller 5         2.1 Entity Representations and Warranties 5   2.2 Reserved
6   2.3 Title to Purchased Assets 6   2.4 Receivables 6   2.5 Clients 7   2.6
Intellectual Property; Privacy 7   2.7 Contracts 9   2.8 Liabilities 10   2.9
Notices of Certain Events 10   2.10 Compliance with Legal Requirements 10   2.11
Governmental Authorizations 12   2.12 Tax Matters 13   2.13 Employee and Labor
Matters 13   2.14 Insurance 15   2.15 Certain Payments 15   2.16 Proceedings;
Orders 15   2.17 Authority; Binding Nature of Agreements 16   2.18
Non-Contravention; Consents 16   2.19 Brokers 17   2.20 No Other Representations
and Warranties 17         3. Representations and Warranties of the Purchaser 17
        3.1 Representations and Warranties of the Purchaser 17   3.2 Authority;
Binding Nature of Agreements 18   3.3 Non-Contravention 18   3.4 Brokers 18  
3.5 Sufficiency of Funds 19   3.6 Investigation by Purchaser; Exclusivity of
Representations 19         4. Indemnification 19         4.1 Survival of
Representations and Covenants 19   4.2 Indemnification by the Seller 19

 

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  4.3 Indemnification by The Purchaser 21   4.4 Conditions of Indemnification 23
  4.5 Exclusive Remedies 23         5. Certain Post-Closing Covenants 23        
5.1 Further Actions 23   5.2 Confidentiality; Publicity 23   5.3 Transition
Services 24   5.4 Accounts Receivable 25   5.5 [Software License 26   5.6
Non-Solicitation 26   5.7 Change of Name 26   5.8 Transfer Taxes 26   5.9 Bulk
Sales Laws 27   5.10 Financial Statements 27   5.11 Business Records 27        
6. Termination 28         6.1 Termination Events 28   6.2 Notice 29   6.3
Effects of Termination 29   6.4 Fees and Expenses 29       7. Miscellaneous
Provisions 29         7.1 Further Assurances 29   7.2 Sole Representations and
Warranties 29   7.3 Notices 30   7.4 Headings 30   7.5 Counterparts 30   7.6
[Unattached Exhibits 31   7.7 Specific Performance 31   7.8 Waiver 31   7.9
Amendments 31   7.10 Severability 31   7.11 Entire Agreement 32   7.12
Construction 32   7.13 Choice of Law and Venue 32   7.14 Waiver of Jury Trial 32
  7.15 No Third-Party Beneficiaries 33

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (“Agreement”) entered into on March 27, 2019 (the
“Execution Date”), by and among ETRANSMEDIA TECHNOLOGY, INC., a New York
corporation (the “Seller”), FORMATIV HEALTH MANAGEMENT, INC., a Delaware
Corporation (“Formativ”), and ASSOCIATED BILLING SERVICES. LLC, a Delaware
Limited Liability Company, DOCTORSXL HOLDINGS, LLC, a Delaware limited liability
company, HARRT ASSOCIATES, LLC, a Delaware limited liability company, MEDI
BILLING SOLUTION SERVICES, LLC, a Delaware limited liability company, MEDI-CLAIM
SERVICES, LLC, a Delaware limited liability company, MEDIGISTICS, LLC, a Florida
limited liability company, ARCHIIVUS, LLC, a Delaware limited liability company,
DOCTORSXL, LLC, a Nevada limited liability company, ASSOCIATED BILLING SERVICES,
INC., an Arizona corporation, MEDI BILLING SOLUTION SERVICES, INC., a Delaware
corporation, MEDI-CLAIM SERVICES, INC., a Delaware corporation, MEDIGISTICS,
INC., a Ohio corporation (collectively, the “Seller Subsidiaries), and MTBC-MED
INC., a Delaware corporation (the “Purchaser”). Seller, Formativ, and Seller
Subsidiaries may hereinafter be referred to as the “Seller Parties.” Seller,
Seller Parties, and Purchaser may each be referred to herein each individually
as a “Party” and/or collectively as the “Parties.” Certain capitalized terms
used in this Agreement are defined in Exhibit “A”.

 

RECITALS

 

Whereas, the Seller and the Seller Subsidiaries (as hereinafter defined) are
engaged in the business of providing medical billing, practice management,
credentialing, transcription, record retention, and request for information and
related services to hospitals, group physician practices and others in
connection with medical care delivered by Part B Healthcare Providers (as
hereinafter defined) (the “Business” and the services rendered by the Business,
the “Business Services” which, for the avoidance of doubt, exclude any patient
access services).

 

Whereas, the Purchaser desires to purchase the Purchased Assets (as hereinafter
defined) with respect to the Business (other than the Excluded Assets (as
hereinafter defined)) and Purchaser is willing to assume the Assumed Liabilities
(as hereinafter defined) with respect to the Business, on the terms and subject
to the conditions set forth in this Agreement.

 

Whereas, the Seller and Seller Subsidiaries, as applicable, wishes to sell the
Purchased Assets to the Purchaser on the terms and subject to the conditions set
forth in this Agreement.

 

Now Therefore, in consideration of the respective covenants, agreements,
representations, warranties and indemnities herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby covenant and agree as follows:

 

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AGREEMENT

 

The parties to this Agreement, intending to be legally bound, agree as follows:

 

1.       Sale of Assets; Related Transactions.

 

1.1       Purchase and Sale of the Purchased Assets. i) On the Closing Date, and
on the terms and subject to the fulfillment of the conditions of this Agreement,
the Seller Parties agree to sell, assign, transfer and deliver to the Purchaser
and cause the Seller Subsidiaries as may be applicable to sell, assign, transfer
and deliver to Purchaser, and the Purchaser agrees to purchase and accept from
the Seller and the Seller Subsidiaries all right, title and interest in and to
the following assets, properties and rights of Seller and the Seller
Subsidiaries (collectively, the “Purchased Assets”), free and clear of all
Liabilities and Encumbrances, except the Permitted Encumbrances: (i) all of the
Seller’s and Seller Subsidiaries’ rights and remedies, as of and from the
Closing Date, in, to and under each Acquired Contract; (ii) the Business
Records; (iii) all fixed assets consisting of furniture, computers, servers, and
related equipment and related software licenses listed on Part 1.1(a)(iii) of
the Disclosure Schedule; (iv) all leasehold improvements relating to the Leases;
(v) all prepayments with respect to the Seller Employee Plans (“Benefit Plans
Prepayment”) and deposits under Leases (“Lease Deposits”); (vi) all Seller IP
and all tangible embodiments of the Seller Products listed on Part 2.6 (a) of
the Disclosure Schedule; (vii) all Contract rights relating to restrictive
covenants listed on Part 1.1(a)(vii) of the Disclosure Schedule; and (viii) all
goodwill of Seller Parties related to the Purchased Assets listed above.

 

(a)       Excluded Assets. Purchaser shall not obtain any right, title or
interest in or to any of Seller’s or Seller Subsidiaries’ assets other than the
Purchased Assets and all of such other assets of Seller and the Seller
Subsidiaries including the property, assets or rights listed on Exhibit “B”
shall be excluded from the Purchased Assets.

 

(b)       Assumed Liabilities. The Purchaser shall assume, pay, discharge and
perform when due the Assumed Liabilities. The Purchaser shall not assume or be
liable for any Liabilities of the Seller or the Seller Subsidiaries other than
the Assumed Liabilities.

 

1.2       Purchase Price.

 

(a)       The total purchase price (the “Purchase Price”) shall be as follows:
One Million Five Hundred Thousand Dollars ($1,500,000.00) paid via bank wire
transfer of immediately available funds to Seller’s bank account.

 

(b)       Except as explicitly provided otherwise herein, Seller or Seller
Subsidiaries, as applicable, will be solely responsible for all expenses and
Liabilities that accrue relative to the Business and Purchased Assets through
the end of the day on the day before the Closing Date;

 

1.3       Closing Conditions. The obligations of Seller Parties and Purchaser to
consummate the Closing are subject to the satisfaction of each of the following
conditions:

 

(a)       The closing of the sale of the Purchased Assets to the Purchaser (the
“Closing”) shall be effective as of 12:01 a.m. ET on the Closing Date or such
other date and time as mutually agreed upon by the Parties;

 

(b)       No injunction, stay, or similar Order issued by any Governmental Body
shall be in effect that restrains, enjoins, stays, or prohibits the consummation
of the Transactions;

 

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(c)       The Parties shall have agreed upon the content of all closing
documents, Schedules, and Exhibits thereto;

 

(d)       Purchaser shall have successfully and to its satisfaction completed
all requisite due diligence prior to Closing;

 

(e)       On the Closing Date (or the first business day immediately following
the same if the Closing Date is a weekend or National holiday) or a date to be
mutually decided upon:

 

(i)       The Seller (and each of the Seller Subsidiaries as may be appropriate)
shall execute and deliver to the Purchaser such bills of sale (in the form
attached as Exhibit “C”), endorsements, and other documents as may (in the
reasonable judgment of the Purchaser) be necessary or appropriate to convey,
transfer and deliver to the Purchaser good and valid title to the tangible
assets included in the Purchased Assets free of any Encumbrances other than
Permitted Encumbrances;

 

(ii)       The Purchaser shall execute and deliver to the Seller (and each of
the Seller Subsidiaries as may be appropriate) the Assumption Agreement (in the
form attached as Exhibit “D”);

 

(iii)       Except as set forth on Exhibit “B”, subject to compliance with Legal
Requirements, the Seller and the Seller Subsidiaries shall deliver to Purchaser
possession and custody of (A) the Acquired Contracts (to the extent copies can
be located in the files of the Seller and the Seller Subsidiaries) and (B) all
Customer Data and other records and data related exclusively and necessarily to
the Acquired Contracts, Retained Employees and Intellectual Property
(collectively, the “Business Records”);

 

(iv)       The Seller (or one of the Seller Subsidiaries as may be appropriate)
shall deliver to the Purchaser all consents, waivers, approvals or
authorizations from the appropriate parties, entities, and/or authorities set
forth on Part 1.3(e)(iv) of the Disclosure Schedule;

 

(v)       The Seller (or one of the Seller Subsidiaries as may be appropriate)
and Purchaser shall each execute and deliver to the other Party a Lease
assignment for each of the offices in Charlotte NC, Phoenix AZ, and Columbus OH
in form mutually acceptable to Seller and the Purchaser;

 

(vi)       The Purchaser shall pay the Purchase Price in accordance with Section
1.2(a);

 

(vii)       The Purchaser shall pay the Seller by wire transfer of immediately
available funds an amount equal to the sum of the Benefit Plans Prepayment, the
Lease Deposits and the April rent payment;

 

 3 

   

 

(viii)       The Purchaser shall deliver to Seller: (A)(i) a copy of the
certificate of incorporation of the Purchaser, certified as of a date no more
than ten (10) business days prior to the Closing Date by the Secretary of State
of the State of Delaware, (ii) a certificate of the Secretary of State of the
State of Delaware, dated as of a date no more than ten (10) business days prior
to the Closing Date, as to the valid existence and good standing of the
Purchaser in the State of Delaware, and (iii) a copy of such resolutions of the
Purchaser as are appropriate to authorize the execution, delivery and
performance by it of this Agreement and each other Transactional Agreement, with
each of the items described in the foregoing clauses (i) through (iii) certified
as true, correct and complete as of the Closing Date by an authorized officer of
the Purchaser; and (B) an officer’s certificate of the Purchaser certifying that
each of the conditions required to be satisfied by the Purchaser pursuant to
this Section 1.3 have been satisfied;

 

(ix)       The Seller Parties shall deliver to Purchaser: (A)(i) a copy of the
certificate of incorporation or formation, as applicable, of the Seller Parties
(ii) a certificate of the Secretary of State of the state of incorporation or
formation, as applicable, of each Seller Party, dated as of a date no more than
ten (10) business days prior to the Closing Date, as to the valid existence and
good standing of the Seller Parties in the state of incorporation or formation,
as applicable, (iii) a copy of such resolutions of the Seller Parties as are
appropriate to authorize the execution, delivery and performance by it of this
Agreement and each other Transactional Agreement, with each of the items
described in the foregoing clauses (i) through (iii) as well as the
Representations and Warranties of Seller Parties contained in Section 2 hereof
are certified as true, correct and complete as of the Closing Date by an
authorized officer of the Seller Parties; and (B) an officer’s certificate of
the Seller Parties certifying that each of the conditions required to be
satisfied by the Seller Parties pursuant to this Section 1.3 have been
satisfied;

 

(f)       From the Execution Date through the Closing Date, Seller and the
Seller Subsidiaries shall have operated the Business as normal and customary for
Seller and Seller Subsidiaries prior to the Execution Date;

 

(g)       The Parties hereto shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by them prior to or on the Closing
Date;

 

(h)       The representations and warranties of the Parties hereto contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date, as if made at and as of such date (or to the extent such
representations and warranties speak as of an earlier date, they shall be true
and correct in all material respects as of such earlier date);

 

(i)       Each Party shall have performed or tendered performance of such
Party’s obligations to be performed hereunder at the Closing; and

 

(j)       The Seller (or one of the Seller Subsidiaries as may be appropriate)
shall have received all consents, waivers, approvals or authorizations from the
appropriate parties, entities, and/or authorities set forth on Part 1.3(e)(iv)
of the Disclosure Schedule.

 

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1.4       Allocation of the Purchase Price. The Purchase Price allocation is to
be based on the fair value of the assets acquired and liabilities assumed. Fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. The value of the tangible assets will be based on the Seller’s
closing balance sheet. The valuation of intangible assets is performed under an
income approach, such as using discounted cash flows, which is the present value
of forecasted cash flows applicable to the asset. The remainder of the purchase
price is assigned to goodwill. The Parties agree that the Purchase Price
allocation will be agreed upon by Seller Parties and Purchaser upon completion
of the Audit and will be subject to approval by Purchaser’s auditor, Grant
Thornton, prior to the Purchaser filing its Report on Form 8-K. The Purchase
Price allocation will be prepared in a manner consistent with Section 1060 of
the Code and the regulations promulgated thereunder. Seller and Purchaser agree
to: (i) be bound by the allocation of the Purchase Price among the Purchased
Assets as reflected on the allocation mutually agreed to by Seller Parties and
Purchaser (the “Purchase Price Allocation”); (ii) act consistently with the
Purchase Price Allocation in the preparation and the filing of all Tax Returns,
including filing Form 8594 with their United States federal income Tax Return(s)
for the taxable year that includes the Closing Date, and in the course of any
audit, review or litigation related to their Taxes for the taxable year that
includes the Closing Date; and (iii) not take and not permit any of their
Affiliates to take a position inconsistent with the Purchase Price Allocation
including for income Tax purposes, including United States federal and state
income Tax and foreign income Tax, unless otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Code.

 

2.       Representations and Warranties of the Seller.

 

The Seller Parties, jointly and severally, represent and warrant to the
Purchaser as follows:

 

2.1       Entity Representations and Warranties.

 

(a)       Organization and Existence of the Seller. Each Seller Party is a
corporation or limited liability company, as applicable, organized and validly
existing under the laws of its jurisdiction of formation.

 

(b)       Entity Power and Capacity. The Seller Parties have the entity power,
authority and capacity to own or lease their assets, including the Purchased
Assets, and to carry on the Business as now being conducted by it.

 

(c)       Validity of Agreement.

 

(i)       The Seller Parties have all necessary entity power, authority and
capacity to enter into and perform its obligations under this Agreement and any
other agreements or instruments to be delivered or given by it pursuant to this
Agreement.

 

(ii)       The execution, delivery and performance by the Seller Parties of this
Agreement and the consummation of the Transactions have been duly authorized by
all necessary entity action on the part of Seller Parties.

 

(iii)       This Agreement and any other agreements entered into pursuant to
this Agreement to which the Seller or Seller Parties are a Party constitute or
will constitute legal, valid and binding obligations of the Seller enforceable
against the Seller in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency or other Laws affecting the
rights of creditors generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.

 

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(d)       Authorizations. There is no requirement for the Seller Parties to make
any filing with, give any notice to or obtain any consent or authorization from
any Governmental Body as a condition to the lawful consummation of the
Transactions.

 

(e)       No Violation. Except as set forth on Part 2.18 of the Disclosure
Schedule, the execution and delivery of this Agreement by the Seller Parties,
the consummation of the Transactions by Seller Parties, and the fulfillment by
the Seller Parties of the terms, conditions and provisions hereof will not (with
or without the giving of notice or lapse of time, or both):

 

(i)       contravene or violate or result in a breach or a default under or give
rise to a right of termination, amendment or cancellation or the acceleration of
any obligations of the Seller under:

 

A.       any Legal Requirement;

 

B.       any Order applicable to the Seller Parties;

 

C.       the governing documents or any resolutions of the Seller Parties; or

 

(ii)       result in the creation or imposition of any Encumbrance on any of the
Purchased Assets.

 

(f)       No Other Agreements to Purchase. Except for the Purchaser’s rights
pursuant to this Agreement, no Person has any option, warrant, right, call,
commitment, conversion right, right of exchange or other Contract or any right
or privilege (whether by law, pre-emptive or contractual) capable of becoming an
option, commitment, conversion right, right of exchange or other Contract for
the purchase from the Seller or Seller Subsidiaries as applicable of any of the
Purchased Assets.

 

2.2       Reserved.

 

2.3       Title to Purchased Assets. The Seller (or one of the Seller
Subsidiaries as may be appropriate) owns, and has good and valid title to, all
of the Purchased Assets. The Purchased Assets will be transferred and assigned
to the Purchaser free and clear of any Encumbrances other than the Permitted
Encumbrances. Part 2.3 of the Disclosure Schedule identifies all of the
Purchased Assets that are being leased or licensed to the Seller or one of the
Seller Subsidiaries. Except for the Excluded Assets, the Purchased Assets will
collectively constitute, as of the Closing Date, all of the properties, rights,
interests and other tangible and intangible assets necessary to enable the
Purchaser to conduct the Business in the manner in which such Business is
currently being conducted.

 

2.4       Receivables. Part 2.4 of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all invoiced accounts receivable, notes
receivable and other receivables of the Seller and the Seller Subsidiaries as of
the Execution Date, which are Excluded Assets.

 

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2.5 Clients.

 

(a)       Part 2.5 of the Disclosure Schedule accurately identifies, and
provides an accurate and complete client-wise monthly breakdown of the Revenues
received during the period beginning January 1, 2017, through the Execution Date
from each Client. Except as set forth in Part 2.5 of the Disclosure Schedule, to
the Sellers’ Knowledge, since March 1, 2019, Seller Parties have not received
any notice (and prior to March 1, 2019 Seller Parties have not received any
written notice) indicating that any Closing Date Client may cease doing business
with the Seller or Seller Subsidiary (as applicable) or may otherwise reduce in
any material respect the volume of business or the fee for business transacted
by such Closing Date Client with the Seller or Seller Subsidiary (as applicable)
below historical levels.

 

(b)       Part 2.5(b) of the Disclosure Schedule accurately identifies, and
provides an accurate and complete Pipeline Client list with anticipated revenue,
if known.

 

2.6       Intellectual Property; Privacy.

 

(a)       Products and Services. Part 2.6(a) of the Disclosure Schedule
accurately identifies and sets forth a general description of each Seller
Product currently being designed, developed, marketed, distributed, provided,
licensed, or sold by the Seller or Seller Subsidiaries.

 

(b)       Registered IP. Part 2.6(b) of the Disclosure Schedule accurately
identifies: (a) each item of Registered IP; (b) the jurisdiction and/or
Governmental Body in which such item of Registered IP has been registered or
filed and the applicable registration or serial number; and (c) any other Person
that has an ownership interest in such item of Registered IP and the nature of
such ownership interest. The Seller Parties have provided to the Purchaser
complete and accurate copies of all applications, correspondence with any
Governmental Body, and other material documents related to such item of
Registered IP in each instance to the extent in their possession.

 

(c)       Inbound Licenses. Part 2.6(c) of the Disclosure Schedule accurately
identifies each written Contract pursuant to which any Intellectual Property
Right used in the operation of the Business as currently conducted that is or
has been licensed, sold, assigned, or otherwise conveyed or provided to the
Seller (other than (i) Contracts between the Seller and its employees, (ii)
non-exclusive Contracts to third-party software that is not incorporated into,
or used in the development, testing, distribution, maintenance, or support of,
any Seller Product and that is not otherwise material to the Seller’s Business;
and (iii) Contracts under which commercially available “off-the-shelf” software
(including software as a service and cloud offerings) is licensed to Seller
pursuant to standard commercial terms for an aggregate license fee of less than
$25,000 per year).

 

(d)       Outbound Licenses. Part 2.6(d) of the Disclosure Schedule accurately
identifies each written Contract pursuant to which any Person has been granted
any license under, or otherwise has received or acquired any right (whether or
not currently exercisable) or interest in, any Seller IP. The Seller is not
bound by, and no Seller IP is subject to, any written Contract containing any
covenant or other provision that in any way limits or restricts the ability of
the Seller to use, exploit, assert, or enforce any Seller IP anywhere in the
world.

 

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(e)       Royalty Obligations. Part 2.6(e) of the Disclosure Schedule contains a
complete and accurate list and summary of all royalties, fees, commissions, and
other amounts payable by the Seller to any Person (other than sales commissions
paid to employees according to the Seller’s standard commissions plan) upon or
for the sale, or distribution of any Seller Product or the use of any Seller IP.
In the event Seller has no such royalty obligations, same is noted in Part
2.6(e) of the Disclosure Schedule

 

(f)       Ownership Free and Clear. The Seller exclusively owns all right,
title, and interest to and in the Seller IP free and clear of any Encumbrances
(other than licenses and rights granted pursuant to the Contracts identified in
Part 2.6(f) of the Disclosure Schedule), it being understood and acknowledged
that the foregoing representation and warranty does not constitute a
representation and warranty of non-infringement of Intellectual Property Rights
of any third Person.

 

(g)       Protection of Proprietary Information. The Seller has taken all
reasonable steps to maintain the confidentiality of and otherwise protect and
enforce their rights in all Seller IP. To Sellers’ Knowledge, without limiting
the generality of the foregoing, no portion of the source code for any software
within the Seller IP has been disclosed or licensed to any escrow agent or other
Person.

 

(h)       Sufficiency. The Seller IP constitutes all of the material
Intellectual Property Rights owned by Seller that is needed to conduct the
Business as currently conducted., it being understood and acknowledged that the
foregoing representation and warranty does not constitute a representation and
warranty of non-infringement of Intellectual Property Rights of any third Person

 

(i)       Harmful Code. To the actual knowledge of and upon reasonable inquiry
(which shall be limited to making inquiries of direct reports and shall not
include inquiries of third parties including any Client or Vendor), and
(“Sellers’ Knowledge”) the Seller Products set forth in Part 2.6(a) of the
Disclosure Schedule do not contain any “viruses,” “worms,” “time-bombs,”
“key-locks,” or any other devices that could disrupt or interfere with the
operation of such Seller Products or equipment upon which the such Seller
Products are intended to operate.

 

(j)       Valid and Enforceable; No Infringement. All Registered IP is,
subsisting, and to Sellers’ Knowledge is valid and enforceable. To Sellers’
Knowledge no Person has infringed, misappropriated, or otherwise violated since
January 1, 2017, and to Sellers’ Knowledge no Person is currently infringing,
misappropriating, or otherwise violating, any Seller IP. Part 2.6(g) of the
Disclosure Schedule accurately identifies (and the Seller has provided to the
Purchaser a complete and accurate copy of) each letter or other written
communication or correspondence that has been sent or otherwise delivered by or
to the Seller or any representative of the Seller regarding any actual, alleged,
or suspected infringement or misappropriation of any Seller IP since January 1,
2017.

 

(k)       No Infringement of Third-Party IP Rights. To Sellers’ Knowledge: (i)
the conduct of the Business as currently conducted does not infringe (directly,
contributorily, by inducement, or otherwise), misappropriate, or otherwise
violate or make unlawful use of any Intellectual Property Right of any other
Person; (ii) no Seller Product set forth in Part 2.6(a) of the Disclosure
Schedule infringes, violates, or makes unlawful use of any Intellectual Property
Right of, or contains any Intellectual Property misappropriated from, any other
Person;. The Seller has not, in the previous two years, received any written
notice alleging that the conduct of the Business infringes, misappropriates, or
violates any Intellectual Property Rights of another Person, including any
letter specifically offering that the Seller obtain a license to any
Intellectual Property Right of another Person.

 

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(l)       Notwithstanding anything herein to the contrary: (i) the
representations and warranties set forth in this Section 2.6 are the only
representations and warranties relating to Intellectual Property Rights; and
(ii) to the extent that any representation or warranty in this Section 2.6
relates to any condition, circumstance, or event, act, or omission that existed
or occurred prior to January 1, 2017 (e.g., the entering into a written
Contract), such representation and warranty is given solely as to Sellers’
Knowledge, whether or not a knowledge qualifier is included in such
representation or warranty.

 

2.7       Contracts.

 

(a)       Exhibits “F”, “J” and “K” hereto contain full and accurate list of the
Acquired Contracts, including any addenda thereto. In the event that a copy of
any Client Contract is unable to be located by Seller Parties, such is indicated
accordingly on the Exhibit. Each Acquired Contract is in full force and effect
in accordance with the terms set forth therein, except as enforcement may be
limited by bankruptcy, insolvency or other Laws affecting the rights of
creditors generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.

 

(b)       Except as set forth in Part 2.7(b) of the Disclosure Schedule: (i)
neither Seller nor any Seller Subsidiary is and to the Sellers’ Knowledge no
other Person is in violation of or breach or default in under any Acquired
Contract; and (ii) to the Seller’s Knowledge, since March 1, 2019, the Seller
has not received any notice or other communication regarding any actual or
alleged termination (and prior to March 1, 2019 Seller Parties have not received
any written notice), material violation or material breach of, or material
default under, or intention to materially reduce or limit the scope of services
or materially reduce the volume of the business under any Acquired Contract; and
(iii) to the Sellers’ Knowledge, neither the Seller nor any Seller Subsidiary
has waived any right under any Acquired Contract.

 

(c)       Except as set forth in Part 2.7(c) of the Disclosure Schedule, from
January 1, 2017 until the Execution Date, neither the Seller nor the Seller
Subsidiaries have guaranteed or otherwise agreed to cause, insure or become
liable for, and neither the Seller nor Seller Subsidiaries have pledged any of
its assets to secure, the performance or payment of any obligation or other
Liability of any other Person.

 

(d)       The performance of the Acquired Contracts has not resulted in any
violation of or failure to comply with any Legal Requirement.

 

(e)       Except as set forth in Part 2.7(e) of the Disclosure Schedule, Seller
Parties have made no promise to any Client, Lessor or Vendor to amend in any
material respect any amount paid or payable to any party under any Acquired
Contract or any other term or provision of any Acquired Contract.

 

(f)       Except for Contracts which Seller or Seller Subsidiary, as applicable
have not been able to locate in its files after a diligent investigation for
Clients whose names are set forth in Part 2.7(b) of the Disclosure Schedule,
Seller has made available to Purchaser true, correct and complete copies of all
of its Acquired Contracts.

 

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2.8       Liabilities.

 

(a)       The Seller has not, at any time, (i) made a general assignment for the
benefit of creditors, (ii) filed, or had filed against it, any bankruptcy
petition or similar filing, (iii) suffered the attachment or other judicial
seizure of all or a substantial portion of its assets, (iv) admitted in writing
its inability to pay its debts as they become due, (v) been convicted of, or
pleaded guilty or no contest to, any felony, or (vi) taken or been the subject
of any action that may have an adverse effect on its ability to comply with or
perform any of its covenants or obligations under any of the Transactional
Agreements.

 

2.9       Notices of Certain Events. From the Execution Date until the earlier
of the termination of this Agreement pursuant to Section 6, or the Closing Date,
Seller Parties shall promptly notify Purchaser in writing of:

 

(a)       any material written communication from any Governmental Body in
connection with or relating to the Transactions;

 

(b)       the commencement or threat of any legal actions, suits,
investigations, or proceedings relating to, involving, or otherwise affecting
any Seller Parties, Seller Subsidiaries or the Business;

 

(c)       any notice or threat of a Material Client’s intention to cancel,
suspend, or otherwise terminate its relationship with Seller or a Seller
Subsidiary, or to materially and adversely change the terms upon which it pays
for goods or services from Seller or any Seller Subsidiary;

 

(d)       any material change to the employment/staffing levels for the
Business;

 

(e)       any event or development that could have a Material Adverse Effect on
the Business; or

 

(f)       any communications from counterparties to Vendor Agreements or Leases
which could have a Material Adverse Effect on the Business.

 

2.10       Compliance with Legal Requirements.

 

(a)       Except as set forth in Part 2.10(a) of the Disclosure Schedule: (a)
the Seller and each Seller Subsidiary is in compliance in all material respects
with each Legal Requirement that is applicable to it or to the conduct of its
business or the ownership or use of any of its assets, including the Purchased
Assets; and (b) the Seller and the Seller Subsidiaries have not received, at any
time since January 1, 2017, any notice from any Governmental Body or any other
Person regarding (i) any violation of, or failure to comply with, any Legal
Requirement, or (ii) any obligation on the part of the Seller or a Seller
Subsidiary to undertake, or to bear all or any portion of the cost of, any
environmental cleanup or any environmental remedial, corrective or response
action of any nature.

 

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(b)       Since January 1, 2017, neither Seller, any Seller Subsidiary nor to
Sellers’ Knowledge any officer, director, manager, or any agent, employee or
independent contractor of the Seller or any Seller Subsidiary has submitted any
claims for reimbursement on behalf of any Client that are in violation of, nor
has engaged in any activity that is in violation of, the federal Medicare or
federal or state Medicaid statutes, the federal TRICARE statute (10 U.S.C. §
1071 et seq.), the civil False Claims Act of 1863 (31 U.S.C. § 3729 et seq.),
criminal false claims statutes (e.g., 18 U.S.C. §§ 287 and 1001), the Federal
Health Care Program Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Program
Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et seq.), Section 14 of
Public Law 100-93, the anti-fraud and related provisions of HIPAA, or related
regulations or other related or similar federal or state laws and regulations
(collectively, “Health Care Program Laws”), including, without limitation, the
following:

 

(i)       making or causing to be made a false statement or representation in
any application for any benefit or payment;

 

(ii)       making or causing to be made a false statement or representation for
use in determining rights to any benefit or payment;

 

(iii)       soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or kind
(A) in return for referring an individual to a Person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part under any Federal Health Care Program, or (B) in return
for purchasing, leasing or ordering, or arranging for or recommending
purchasing, leasing or ordering of any good, facility, service or item for which
payment may be made in whole or in part under any Federal Health Care Program;

 

(iv)       offering or paying any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind, to any
person to induce such Person (A) to refer an individual to a person for the
furnishing or arranging of any item or service for which payment may be made in
whole or in part under a Federal Health Care Program, or (B) to purchase, lease,
order or arrange for or recommend purchasing, leasing or ordering of any good,
facility, service or item for which payment may be made in whole or in part
under a Federal Health Care Program; or

 

(v)       any other activity that violates any state or federal Legal
Requirements, permit requirements and/or Payor contractual obligations, if any,
relating to prohibiting fraudulent, abusive or unlawful practices connected in
any way with the provision of health care items or services or the billing for
such items or services provided to a beneficiary of any Federal Health Care
Program.

 

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(c)       The Seller and Seller Subsidiaries, as applicable (i) are, and have at
all times been, in all material respects in compliance with HIPAA and Subtitle D
of the Health Information Technology for Economic and Clinical Health Act
(including all rules and regulations thereunder) (the “HITECH Act”) and
comparable state privacy and data security laws and regulations applicable to
the Seller and Seller Subsidiaries; and (ii) the Seller and Seller Subsidiaries,
as applicable, have used and disclosed, and uses and discloses, Protected Health
Information (as defined in 45 C.F.R. § 160.103) (i) to the extent applicable, in
accordance with any limitations set forth in its Closing Date Client or Payor
agreements; and (ii) to perform functions, activities or services in accordance
with the limitations set forth in HIPAA, the HITECH Act, and applicable state
privacy and data security laws and regulations (to the extent not preempted by
federal law). The Seller and Seller Subsidiaries have not received, at any time,
any written notice from any Governmental Body or any other Person regarding any
actual or suspected violation of, or failure to comply with, HIPAA, the HITECH
Act or applicable state privacy and data security laws and regulations. No
breach has occurred with respect to any unsecured Protected Health Information
maintained by the Seller Parties that are subject to the notification
requirements of 45 C.F.R. part 164, Subpart D, and no information security or
privacy breach event has occurred that would require notification under any
comparable state laws applicable to the Seller and/or Seller Subsidiaries, as
applicable. With regard to compliance with HIPAA, the HITECH Act, or applicable
state privacy and data security laws and regulations, the Seller and all
applicable Seller Subsidiaries have no obligation to undertake, or to bear all
or any portion of the cost of, any mitigation, notifications or any remedial,
corrective or response action of any nature. The Seller Products comply with
HIPAA, the HITECH Act and applicable state privacy and data security laws and
regulations.

 

2.11       Governmental Authorizations. Part 2.11 of the Disclosure Schedule
identifies: (a) each Governmental Authorization that is held by the Seller or a
Seller Subsidiary; and (b) each other Governmental Authorization that is held by
any employee of the Seller and relates to or is used in connection with the
Business. The Seller Parties have delivered to the Purchaser accurate and
complete copies of all of the Governmental Authorizations identified in Part
2.11 of the Disclosure Schedule, including all renewals thereof and all
amendments thereto. Each Governmental Authorization identified or required to be
identified in Part 2.11 of the Disclosure Schedule is valid and in full force
and effect. Except as set forth in Part 2.11 of the Disclosure Schedule: (i) the
Seller and Seller Subsidiaries are and have at all times since January 1, 2017
been in compliance in all material respects with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Part 2.11 of the Disclosure Schedule; (ii) since January 1, 2017,
the Seller and Seller Subsidiaries have not received any notice from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, alleged,
possible or potential revocation, withdrawal, suspension, cancellation,
termination or material modification of any Governmental Authorization; and
(iii) since January 1, 2017, all applications required to have been filed for
the renewal of the Governmental Authorizations required to be identified in Part
2.11 of the Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required to
have been given or made with respect to such Governmental Authorizations has
been duly given or made on a timely basis with the appropriate Governmental
Body. The Governmental Authorizations identified in Part 2.11 of the Disclosure
Schedule constitute all of the Governmental Authorizations necessary (i) to
enable the Seller and Seller Subsidiaries to conduct the Business in the manner
in which the Business is currently being conducted, and (ii) to permit the
Seller and Seller Subsidiaries to own and use the Purchased Assets in the manner
in which they are currently owned and used.

 

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2.12       Tax Matters. Except as set forth in Part 2.12 of the Disclosure
Schedule:

 

(a)       The Seller and Seller Subsidiaries, as applicable have filed all Tax
Returns or will file Tax Returns under applicable Legal Requirements. Seller and
Seller Subsidiaries, as applicable represent that all such Tax Returns were
correct and complete in all material respects. All Taxes due and owing by the
Seller and Seller Subsidiaries, as applicable (whether or not shown on any Tax
Return) have been paid. There are no Encumbrances for Taxes (other than Taxes
not yet due and payable) upon any of the assets of the Seller and Seller
Subsidiaries, as applicable.

 

(b)       The Seller and Seller Subsidiaries, as applicable have withheld and
paid all Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third Party.

 

(c)       No Proceedings with respect to any Tax is pending or being conducted
with respect to the Seller and Seller Subsidiaries, as applicable. The Seller
and Seller Subsidiaries, as applicable have not received from any Governmental
Body any (i) written (A) notice indicating an intent to open an audit or other
review for any Tax Return, (B) request for information related to a Tax matter,
or (C) notice of deficiency or proposed adjustment of or any amount of Tax
proposed, asserted, or assessed by any Governmental Body against the Seller and
Seller Subsidiaries, as applicable or (ii) other notice since March 1, 2019
relating to any of the items referenced in Section 2.12(c)(i).

 

(d)       Seller Parties shall, at their own cost and expense, file any and all
of Seller Parties’ past-due tax returns and pay any taxes due under such
past-due tax returns. Seller Parties represent and warrant that they shall bear
full responsibility for the filing of such tax returns and shall indemnify
Purchaser against any and all claims, proceedings, or otherwise related to such
filings.

 

(e)       Within a reasonable period of time following the Closing Date, Seller
Parties shall provide to Purchaser municipal, state and county tax clearance
certificates or letters demonstrating the payment of all tax liabilities with
respect to the Business which, if unpaid, could impose successor or continuing
liability.

 

(f)       The Seller Parties have not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

 

2.13       Employee and Labor Matters.

 

(a)       Part 2.13(a) of the Disclosure Schedule accurately sets forth, with
respect to each employee of the Seller (including any employee of the Seller who
is on a leave of absence or on layoff status):

 

(i)       the name of such employee and the date as of which such employee was
originally hired by the Seller;

 

(ii)       such employee’s title, primary work location, and a description of
such employee’s duties and responsibilities;

 

 13 

   

 

(iii)       the aggregate dollar amount of the compensation (including wages,
salary, commissions, director’s fees, fringe benefits, bonuses, profit-sharing
payments and other payments or benefits of any type) received by such employee
from the Seller with respect to services performed in 2018;

 

(iv)       such employee’s annualized compensation as of the date of this
Agreement;

 

(v)       each Seller Employee Plan in which such employee participates or is
eligible to participate; and

 

(vi)       any Governmental Authorization that is held by such employee and that
relates to or is useful in connection with the Seller’s business.

 

(b)       The employment of each of the Seller’s employees is terminable by the
Seller at will. The Seller has delivered to the Purchaser accurate and complete
copies of all employee manuals and handbooks, disclosure materials, policy
statements and other materials relating to the employment of the current and
former employees of the Seller.

 

(c)       Part 2.13(c) of the Disclosure Schedule accurately sets forth, with
respect to each independent contractor of the Seller (exclusive of attorneys,
accountants, insurance agents and other professionals who have provided services
to Seller):

 

(i)       the name of such independent contractor and the date as of which such
independent contractor was originally hired by the Seller;

 

(ii)       a description of such independent contractor duties and
responsibilities;

 

(iii)       the aggregate dollar amount of the compensation (including all
payments or benefits of any type) received by such independent contractor from
the Seller with respect to services performed in 2018 and for the period of 2019
prior to the Closing Date;

 

(iv)       the terms of compensation of such independent contractor; and

 

(v)       any Governmental Authorization that is held by such independent
contractor and that relates to or is useful in connection with the Seller’s
business.

 

(d)       Except as set forth in Part 2.13(d) of the Disclosure Schedule, the
Seller is not a Party to or bound by any employment agreement or any union
contract, collective bargaining agreement or similar Contract.

 

(e)       None of the current or former independent contractors of the Seller
could be reclassified as an employee. Since January 1, 2017, the Seller has not
had any temporary or leased employees. No independent contractor of the Seller
is eligible to participate in any Seller Employee Plan.

 

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2.14       Insurance. Seller and the Seller Subsidiaries maintain insurance
coverage of a character and in such amounts as are customarily insured against
by similarly situated companies in the same or similar businesses. No insurer
under any such insurance policy has canceled or disclaimed Liability under any
such policy and no notice of cancellation or termination has been received by
Seller or any Seller Subsidiary since January 1, 2017. Part 2.14 of the
Disclosure Schedule accurately sets forth with respect to each such insurance
policy maintained by the Seller and the Seller Subsidiaries: (i) the name of the
insurance carrier that issued such policy and the policy number of such policy;
and (ii) a description of any claims pending, and any claims that have been
asserted in the past 24 months, with respect to such policy or any predecessor
insurance policy. Seller Parties shall maintain their Errors and Omissions
insurance policy for a period of eighteen (18) months following the Closing Date
at the same level of coverage for pre-Closing incident as it exists on the
Closing Date.

 

2.15       Certain Payments. The Seller has not, and to Sellers’ Knowledge, no
officer, employee, agent or other Person associated with or acting for or on
behalf of the Seller or Seller Subsidiaries has, at any time, directly or
indirectly: (a) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any political
activity, (ii) to make any unlawful payment to any governmental official or
employee, or (iii) to establish or maintain any unlawful or unrecorded fund or
account of any nature; (b) made any false or fictitious entry, or failed to make
any entry that should have been made, in any of the books of account or other
records of the Seller or Seller Subsidiaries, as applicable; (c) made any
payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
Person; or (d) made any payment to any Person, or provided any favor or anything
of value (whether in the form of property or services, or in any other form) to
any Person, in either case in violation of applicable Legal Requirements for the
purpose of obtaining or paying for (i) favorable treatment in securing business,
or (ii) any other special concession.

 

2.16       Proceedings; Orders. Except as set forth in Part 2.16 of the
Disclosure Schedule, there is no pending Proceeding that involves the Seller
Parties that has had or would reasonably be expected to have a Material Adverse
Effect and to Sellers’ Knowledge no Person has threatened Seller or any Seller
Subsidiary in writing during the 24 months preceding the date of this Agreement
to commence any such Proceeding: (i) that involves the Seller and/or any
applicable Seller Subsidiaries or that otherwise relates to or might affect the
Business or any of the Purchased Assets (whether or not the Seller Parties are
named as a party thereto); or (ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, any of
the Transactions. Except as set forth in Part 2.16 of the Disclosure Schedule,
no Proceeding has been commenced by or against the Seller Parties during the 24
months preceding the date of this Agreement. The Seller Parties have delivered
to the Purchaser accurate and complete copies of all pleadings, correspondence
and other written materials (to which the Seller Parties have access) that
relate to the Proceedings identified in Part 2.16 of the Disclosure Schedule.
There is no Order to which the Seller Parties, any Seller Subsidiary or any of
the assets owned or used by the Seller or any Seller Subsidiary, is subject. No
employee of the Seller is subject to any Order that may prohibit employee from
engaging in or continuing any conduct, activity or practice relating to the
Business. To Seller’s Knowledge, there is no proposed Order that, if issued or
otherwise put into effect, (i) may have a material adverse effect on the
Business, or on the ability of Seller Parties to comply with or perform any
covenant or obligation under any of the Transactional Agreements, or (ii) may
have the effect of preventing, delaying, making illegal or otherwise interfering
with any of the Transactions

 

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2.17       Authority; Binding Nature of Agreements.

 

(a)       The Seller Parties have the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under each of the
Transactional Agreements to which it is or may become a Party. This Agreement
constitutes the legal, valid and binding obligation of the Seller Parties,
enforceable against the Seller Parties in accordance with its terms. Upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements to which the Seller Parties are a Party will
constitute the legal, valid and binding obligation of the Seller Parties and
will be enforceable against the Seller Parties in accordance with its terms.

 

2.18       Non-Contravention; Consents. Except as set forth in Part 2.18 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements by the Seller Parties, nor the consummation or
performance by the Seller Parties of any of the Transactions, or the sale and
assignment of the Purchased Assets to Purchaser, will directly or indirectly
(with or without notice or lapse of time):

 

(a)       contravene, conflict with or result in a violation of, the certificate
of formation, operating agreement or other organizational documents of Seller
Parties;

 

(b)       contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Transactions
or to exercise any remedy or obtain any relief under, any Legal Requirement or
any Order to which the Seller Parties, or any of the assets of the Seller
Parties, is subject;

 

(c)       contravene, conflict with or result in a violation of any of the terms
or requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is to
be included in the Purchased Assets or is held by the Seller Parties or any
employee of the Seller Parties;

 

(d)       contravene or conflict with or result in a violation or breach of, or
result in a default under, any provision of any of the Acquired Contracts;

 

(e)       give any Person the right to (i) accelerate the maturity or
performance of any Acquired Contract, or (ii) cancel, terminate or modify any
Acquired Contract; or

 

(f)       result in the imposition or creation of any Encumbrance upon or with
respect to any of the Purchased Assets.

 

Except as set forth in Part 2.18 of the Disclosure Schedule, neither the Seller
Parties nor the Seller Subsidiaries will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
the execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions.

 

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2.19       Brokers. Seller has not engaged any broker in respect of the
Transactions. Seller shall indemnify and hold the Purchaser harmless from and
against any and all claims, demands, causes of action, debts or liabilities
arising out of or on account of a claim by any broker, finder, investment banker
or agent that he, she or it is entitled to a commission or fees as a result of
being retained or used by the Seller.

 

2.20       No Other Representations and Warranties. Except for the
representations and warranties contained in this Section 2, neither the Seller
Parties nor any other Person on behalf of any Seller Parties makes any other
express or implied representation or warranty with respect to Seller, the Seller
Subsidiaries or the Business or with respect to any other information provided
to Purchaser, and Seller Parties disclaim any other representations or
warranties, whether made by the Seller Parties, the Seller Subsidiaries or any
of their respective Affiliates, or any of the Seller’s officers, directors,
employees, agents or representatives.

 

3.       Representations and Warranties of the Purchaser. 

 

The Purchaser represents and warrants, to and for the benefit of the Seller, as
follows:

 

3.1       Representations and Warranties of the Purchaser.

 

The Purchaser represents and warrants to the Seller Parties as of the date of
this Agreement as follows:

 

(a)       Incorporation and Existence of the Purchaser. The Purchaser is a
corporation duly formed and validly existing under the Laws of State of
Delaware.

 

(b)       Validity of Agreement.

 

(i)       The Purchaser has all necessary corporate power to enter into and
perform its obligations under this Agreement and any other agreements or
instruments to be delivered or given by it pursuant to this Agreement.

 

(ii)       The execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the Transactions have been duly authorized by
all necessary corporate action on the part of the Purchaser.

 

(iii)       This Agreement and any other agreements entered into pursuant to
this Agreement to which the Purchaser is a Party constitute or will constitute
legal, valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency or other Laws affecting the rights of
creditors generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.

 

(c)       Authorizations. There is no requirement for the Purchaser to make any
filing with, give any notice to or obtain any consent or Authorization from any
Governmental Body or any other third Party as a condition to the lawful
consummation of the Transactions.

 

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(d)       No Violation. The execution and delivery of this Agreement by the
Purchaser, the consummation of the Transactions and the fulfillment by the
Purchaser of the terms, conditions and provisions hereof will not (with or
without the giving of notice or lapse of time, or both) contravene or violate or
result in a breach or a default under or give rise to a right of termination,
amendment or cancellation or the acceleration of any obligations of the
Purchaser under:

 

(i)       any Legal Requirement;

 

(ii)       any judgment, Order, writ, injunction or decree of any Governmental
Body having jurisdiction over the Purchaser;

 

(iii)       the governing documents or any resolutions of the board of directors
of the Purchaser; or

 

(iv)       the provisions of any Contract to which the Purchaser is a Party or
by which it is, or any of its properties or assets are, bound.

 

3.2       Authority; Binding Nature of Agreements. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under this Agreement, and the execution and delivery of this
Agreement by the Purchaser have been duly authorized by all necessary action on
the part of the Purchaser and its board of directors. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under the Transactional Agreements to which it is or may become
a Party, and the execution, delivery and performance of the Transactional
Agreements by the Purchaser have been duly authorized by all necessary action on
the part of the Purchaser and its board of directors. This Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against it
in accordance with its terms. Upon the execution and delivery of the
Transactional Agreements at the Closing, the Transactional Agreements will
constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their terms.

 

3.3       Non-Contravention. Neither the execution and delivery by Purchaser of
any of the Transactional Agreements nor the consummation or performance by the
Purchaser of the Transactions will directly or indirectly (with or without
notice or lapse of time): (i) contravene, conflict with or result in a violation
of, the certificate of incorporation or by-laws of Purchaser; (ii) contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order to which
the Purchaser is subject; or (iii) contravene, conflict with or result in a
violation or breach of, or result in a default under, any provision of any
material Contract to which the Purchaser is a Party.

 

3.4       Brokers. Purchaser shall be liable for brokerage fees and expenses due
to their having retained in connection with the Transactions. Purchaser shall
indemnify and hold the Seller Parties harmless from and against any and all
claims, demands, causes of action, debts or liabilities arising out of or on
account of a claim by any other broker, finder, investment banker or agent that
he, she or it is entitled to a commission or fees as a result of being retained
or used by the Purchaser.

 

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3.5       Sufficiency of Funds. Purchaser will have available at Closing
immediately available funds sufficient to enable Purchaser to make payment of
the Purchase Price and consummate the Transactions.

 

3.6       Investigation by Purchaser; Exclusivity of Representations. PURCHASER
FURTHER ACKNOWLEDGES THAT PURCHASER HAS CONDUCTED AN INDEPENDENT INSPECTION AND
INVESTIGATION OF THE BUSINESS AND THE PURCHASED ASSETS AND THAT IN PROCEEDING
WITH ITS ACQUISITION OF THE PURCHASED ASSETS, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN SECTION 2 OF THIS AGREEMENT, PURCHASER IS
ACQUIRING THE PURCHASED ASSETS BASED SOLELY UPON SUCH INDEPENDENT INSPECTIONS
AND INVESTIGATIONS. ACCORDINGLY, PURCHASER ACKNOWLEDGES THAT THE TANGIBLE
PURCHASED ASSETS ARE BEING PURCHASED “AS IS, WHERE IS AND WITH ALL FAULTS”.
PURCHASER AGREES THAT (i) SELLER PARTIES MAKE NO EXPRESS WARRANTIES EXCEPT THE
REPRESENTATIONS AND WARRANTIES IN SECTION 2 OF THIS AGREEMENT.

 

4.       Indemnification.

 

4.1       Survival of Representations and Covenants. Subject to the limitations
and other provisions of this Agreement, the representations and warranties
contained in Section 2 herein shall survive the Closing and shall remain in full
force and effect until the date that is twelve (12) months from the Closing
Date, with the exception of the representations and warranties contained in
Sections 2.1 and 2.17 herein, (the “Seller Fundamental Representations”), which
shall survive the Closing and shall remain in full force and effect for the
statute of limitations, and the representation and warranties in Section 2.12
herein which shall survive the Closing and remain in full force and effect until
the date that is six (6) months from the applicable statute(s) of limitations.
The representations and warranties contained in Section 3 shall survive the
Closing and shall remain in full force and effect until the date that is twelve
(12) months from the Closing Date, with the exception of the representations and
warranties contained in Section 3.1 and 3.2 herein, which shall survive the
Closing and remain in full force and effect for the statute of limitations. None
of the covenants or other agreements contained in this Agreement shall survive
the Closing Date other than those which by their terms contemplate performance
after the Closing Date, and each such surviving covenant and agreement shall
survive the Closing for the period contemplated by its terms. Notwithstanding
the foregoing, any Claim Notice (as defined in Exhibit “G”) delivered by the
non-breaching Party to the breaching Party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the expiration of
such survival period and such claims shall survive until finally resolved.

 

4.2       Indemnification by the Seller Parties.

 

(a)       The Seller Parties shall hold harmless and indemnify each of the
Purchaser Indemnitees from and against, and shall compensate and reimburse each
of the Purchaser Indemnitees for, any Damages that are proximately suffered or
incurred by any of the Purchaser Indemnitees (regardless of whether or not such
Damages relate to any third-party claim) and that arise directly or indirectly
from or as a direct or indirect result of, or are directly or indirectly
connected with:

 

(i)       any Breach of any of the representations or warranties of Seller
Parties contained in this Agreement, the other Transactional Agreements, or
instrument delivered by or on behalf of Seller or Seller Subsidiaries pursuant
to this Agreement, as of the date such representation or warranty was made or as
if such representation or warranty was made on and as of the Closing Date
(except for representations and warranties that expressly relate to a specified
date, the inaccuracy in or breach of which will be determined with reference to
such specified date;

 

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(ii)       any Breach of any of the Seller Fundamental Representations, as of
the date such representation or warranty was made;

 

(iii)       any Breach or non-fulfillment of any covenant, agreement or
obligation to be performed by any of the Seller Parties pursuant to this
Agreement, the other Transactional Agreements or any certificate or instrument
delivered by or on behalf of Seller Parties pursuant to this Agreement;

 

(iv)       any claim against the Purchaser or any other Purchaser Indemnitee
involving an Excluded Asset, other than the Assumed Liabilities and the
Transitional Costs; or

 

(v)       the proceedings relating to the case referred to as the North Carolina
Class Action and customer disputes between the Seller Parties and each of 3M,
KSOSN, Scripps, and South Florida Foot and Ankle, together with all related
claims and Proceedings (collectively, the “Known Claims”); or

 

(vi)       any claim or Proceeding accruing or existing on or prior to the
Closing Date, other than the Transitional Costs, against the Purchaser or any
other Purchaser Indemnitee by any third party based upon, resulting from or
arising out of the Business, operations, properties, Purchased Assets, actions,
inactions, acts, omissions, or obligations of any of the Seller Parties, their
Representatives or Affiliates conducted or existing on or prior to the Closing
Date, other than the Transitional Costs.

 

(vii)       Any claim or Proceeding against any of the Purchaser Indemnitees by
any Person based upon, resulting from or arising out of the employment of the
Person by the Seller Parties, excluding any claims based on or arising out of or
as a result of acts or omissions of the Purchaser in connection with the
Transaction.

 

(b)       Subject to Section 4.2(d), the Seller Parties shall not be required to
make any indemnification payment pursuant to Section 4,2(a) for any complaint by
a Client relating to Business Services performed prior to the Closing Date
unless the Damages exceed $50,000 in which event the Purchaser Indemnitees shall
be entitled to be indemnified against and compensated and reimbursed for the
amount of Damages in excess of $25,000.

 

(c)       Subject to Section 4.2(d), without duplication of any Damages relating
to a Client complaint referenced in Section 4.2(b), the Seller Parties shall not
be required to make any indemnification payment pursuant to Section 4.2(a) for
any Breach as set forth in Section 4.2(a) until such time as the total amount of
all Damages (including the Damages arising from such Breach and all other
Damages arising from any other Breaches of any representations or warranties)
that have been directly or indirectly suffered or incurred by any one or more of
the Purchaser Indemnitees, or to which any one or more of the Purchaser
Indemnitees has or have otherwise become subject, exceeds $25,000. If the total
amount of Damages exceeds $25,000, the Purchaser Indemnitees shall be entitled
to be indemnified against and compensated and reimbursed for the amount of
Damages in excess of $25,000. This Section 4.2(c) shall not be applicable to
claims under Sections 4.2(a)(iii), 4.2(a)(iv), 4.2(a)(v) or 5.6 herein.

 

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(d)       Notwithstanding the foregoing, or any other clause in this Agreement,
the Seller Parties’ maximum liability under this Agreement for indemnification
will be the Purchase Price, except for claims relating to unpaid worker’s
compensation premium, unpaid unemployment insurance premium payments,
pre-Closing accrued personnel costs, the Known Claims, and amounts due and owing
to Governmental Bodies.

 

(e)       The amount of any Damages for which indemnification is provided by
Seller Parties shall be net of any amounts actually recovered by the Purchaser
Indemnitees under insurance policies, indemnification agreements with any third
parties or other sources of reimbursement in effect and applicable to such
Damages (together, “Collateral Sources”). If the Purchaser Indemnitee receives
an amount from any Collateral Source subsequent to any indemnification provided
by the Seller Parties, the Purchaser Indemnitee shall promptly reimburse the
Seller Party for any payment made or expense incurred by the Purchaser
Indemnitee in connection with providing such indemnification up to such amount
received by the Purchaser Indemnitee. The Purchaser Indemnitees shall use their
Best Efforts to pursue and collect on any recovery available under any insurance
policies.

 

(f)       Notwithstanding anything in this Agreement to the contrary, no
Purchaser Indemnitee shall be indemnified or reimbursed for any (i) exemplary or
punitive damages, lost profits or diminution in value damages or (ii) Damages
that are not the probable and reasonably foreseeable result of the relevant
breach or nonfulfillment, suffered or incurred by a Purchaser Indemnitee.

 

(g)       Each Purchaser Indemnitee claiming indemnification under this Section
4.2 shall take, and cause its Affiliates to take, all reasonable steps to
mitigate any claim for indemnification hereunder upon becoming aware of any
event or circumstance that would be reasonably expected to, or does, give rise
thereto, including incurring costs only to the minimum extent necessary to
remedy the breach that gives rise to such claim for indemnification hereunder
(which costs shall be subject to recovery as additional indemnified Damages of
the Purchaser Indemnitee.

 

4.3       Indemnification by the Purchaser.

 

(a)       The Purchaser shall hold harmless and indemnify each of the Seller
Indemnitees from and against, and shall compensate and reimburse the Seller
Indemnitees for, any Damages that are proximately suffered or incurred by the
Seller Indemnitees (regardless of whether or not such Damages relate to any
third-party claim) and that arise directly or indirectly from or as a direct or
indirect result of, or are directly or indirectly connected with:

 

(i)       any Breach of any of the representations or warranties of the
Purchaser contained in this Agreement, the other Transactional Agreements or in
any certificate or instrument delivered by or on behalf of the Purchaser
pursuant to this Agreement, as of the date such representation or warranty was
made or as if such representation or warranty was made on and as of the Closing
Date (except for representations and warranties that expressly relate to a
specified date, the inaccuracy in or breach of which will be determined with
reference to such specified date);

 

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(ii)       any Breach or non-fulfillment of any covenant, agreement or
obligation to be performed by the Purchaser pursuant to this Agreement, the
other Transactional Agreements or any certificate or instrument delivered by or
on behalf of the Purchaser pursuant to this Agreement;

 

(iii)       any claim or Proceeding accruing or arising on or after the Closing
Date against any of the Seller Indemnitees by any Person based upon, resulting
from or arising out of the employment of the Retained Employees by the
Purchaser, excluding any claims based on or arising out of or as a result of
acts or omissions of the Seller Parties in connection with the Transaction;

 

(iv)       any claim or Proceeding against any of the Seller Indemnitees by any
third-party based upon, resulting from or arising out of the Business,
operations, properties, Purchased Assets or obligations of Purchaser or any of
its Affiliates conducted, or accruing on or after the Closing Date; and

 

(v)       the Assumed Liabilities or the Transitional Costs.

 

(b)       Subject to Section 4.3(c), and except for the obligations specified in
Section 4.3(a)(iii) and Section 4.3(a)(iv), the Purchaser shall not be required
to make any indemnification payment pursuant to Section 4.3(a) for any Breach of
any of its representations and warranties until such time as the total amount of
all Damages (including the Damages arising from such Breach and all other
Damages arising from any other Breaches of its representations or warranties)
that have been directly or indirectly suffered or incurred by the Seller
Indemnitees, or to which the Seller Indemnitees have otherwise become subject,
exceeds $50,000 in the aggregate. If the total amount of such Damages exceeds
$25,000 in the aggregate, the Seller Indemnitees shall be entitled to be
indemnified against and compensated and reimbursed for the amount of such
Damages in excess of $25,000.

 

(c)       Notwithstanding the foregoing, or any other clause in this Agreement,
the Purchaser’s maximum liability under this Agreement for indemnification or
otherwise will be an amount equal to the Purchase Price.

 

(d)       Each Seller Indemnitee claiming indemnification under this Section 4.3
shall take, and cause its Affiliates to take, all reasonable steps to mitigate
any claim for indemnification hereunder upon becoming aware of any event or
circumstance that would be reasonably expected to, or does, give rise thereto,
including incurring costs only to the minimum extent necessary to remedy the
breach that gives rise to such claim for indemnification hereunder (which costs
shall be subject to recovery as additional indemnified Damages of the Seller
Indemnitee).

 

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(e)       The amount of any Damages for which indemnification is provided by
Purchaser shall be net of any amounts actually recovered by the Seller
Indemnitees under insurance policies, indemnification agreements with any third
parties or other sources of reimbursement in effect and applicable to such
Damages (together, “Collateral Sources”). If the Seller Indemnitee receives an
amount from any Collateral Source subsequent to any indemnification provided by
the Purchaser, the Seller Indemnitee shall promptly reimburse the Purchaser for
any payment made or expense incurred by the Seller Parties in connection with
providing such indemnification up to such amount received by the Seller
Indemnitee. The Seller Indemnitees shall use their Best Efforts to pursue and
collect on any recovery available under any insurance policies.

 

4.4       Conditions of Indemnification. The obligations and liabilities of the
Purchaser and Seller Parties under Section 4.2 and 4.3, respectively, shall be
subject to the procedures set forth on Exhibit “G”.

 

4.5       Exclusive Remedies. The Parties acknowledge and agree that their sole
and exclusive remedy with respect to any and all claims (for any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or
otherwise relating to the subject matter of this Agreement), shall be pursuant
to the indemnification provisions set forth in Section 4.2 and Section 4.3. In
furtherance of the foregoing, each Party hereby waives, to the fullest extent
permitted under law, any and all rights, claims and causes of action for any
breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement it
may have against the other parties hereto and their Affiliates and each of their
respective representatives arising under or based upon any law, except pursuant
to the indemnification provisions set forth in Section 4.2 and Section 4.3.
Nothing in this Section 4.5 shall limit any Person’s right to seek and obtain
any equitable relief to which any Person shall be entitled.

 

4.6       Adjustment to Purchase Price. Unless otherwise required by Law, any
payment by Purchaser or the Seller Parties under this Section 4 shall be treated
by the Parties as an adjustment to the Purchase Price.

 

5.       Certain Post-Closing Covenants.

 

5.1       Further Actions. From and after the Closing Date, the Seller Parties
and Purchaser shall reasonably cooperate with the other Party and the other
Party’s Affiliates and Representatives, and shall execute and deliver such
documents and take such other actions as the Seller Parties or Purchaser, as
applicable, may reasonably request, for the purpose of consummating the
Transactions.

 

5.2       Confidentiality; Publicity.

 

(a)       Seller Parties acknowledge that Purchaser is subject to the reporting
requirements of the Securities and Exchange Commission and its preferred and
common stock are quoted on NASDAQ. Seller Parties agree not to use any
Confidential Information to purchase, sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of Purchaser’s
preferred or common stock (or other securities, warrants, or other forms of
convertible securities outstanding or rights to acquire such securities). Seller
Parties acknowledge that a purpose of this Agreement relating to confidentiality
is so that Purchaser will be in compliance with Regulation FD promulgated by the
Securities and Exchange Commission. Subject to Section 5.12, Seller Parties
further acknowledges that Purchaser may be required to make certain public
disclosures and filings with the Securities and Exchange Commission that relate
to the Transactions with or without advance notice to Seller Parties.

 

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5.3       Transition Services. 

 

(a)       To the extent such employees remain in the employ of Seller, for a
period of up to and including ninety (90) days after the Closing Date, Seller
shall make available to Purchaser the Transition Services Employees to assist
with the orderly transition of the Business to Purchaser. Purchaser shall
reimburse Seller within ten (10) days after receipt of an invoice from Seller
for a pro-rata share (based on time spent working on matters relating to the
transition of the Business as compared to time spent working on other matters)
of Seller’s reasonable and documented out-of-pocket costs associated with the
provision of the Transition Services Employees including, without limitation,
all salary and wages, accrued sick days and vacation, employer taxes and health,
dental, life insurance and other benefits, and specifically excluding bonuses,
severance and other payments not made on a regular bi-weekly basis. Seller shall
provide such transitional services to Purchaser in a manner consistent in all
material respects with the manner in which such services were provided to the
Business while it was operated by Seller. Seller makes no warranties, express or
implied, with respect to the transitional services to be provided by the
Transition Services Employees to Purchaser hereunder. At the end of each
bi-weekly pay period, the Seller Parties shall evaluate the time spent by the
Transition Services Employees on transition services and other services for the
Seller Parties and, if they are not fully engaged in such services, may in their
reasonable good faith discretion terminate the employment of the Transition
Services Employees and cease providing their transition services; provided that
prior to such termination the Seller Parties shall consult with the Purchaser
regarding the termination and if Purchaser agrees in writing to reimburse the
Seller Parties for all the Seller Parties’ out-of-pockets costs of continuing to
hire any of the Transition Services Employees who the Seller Parties intend to
terminate, the Seller Parties will continue to employ such Transition Services
Employee and provide the transition services contemplated by this Section 5.3(a)
for the period that the Purchaser has agreed to reimburse the Seller Parties for
(which shall not extend beyond ninety (90) days after the Closing Date).

 

(i)       Purchaser may, at its sole discretion, elect to offer employment to
any, all, or none of the Transition Services Employees during the ninety (90)
post-closing transition period. Seller Parties shall be solely responsible for
any and all severance payments to any Transition Services Employee not offered
employment by the Purchaser.

 

(b)       For a period of up to and including ninety (90) days after the Closing
Date, Seller Parties shall employ their reasonable efforts to assist Purchaser,
at Purchaser’s sole expense, to assist Purchaser to transition the operations of
the Business to Purchaser. The transition services will be limited to the
following: human capital, financial records, computer hardware and software,
migration of all Business Records that has not yet been transferred, utilization
of submitter identifications in use at the Closing Date, Purchaser’s use of
vendor equipment not included in Exhibit “K” at Purchaser’s sole cost and
expense as is necessary to continue the Business, and a coordinated plan for
appropriately handling client communications that come to Seller Parties. In
connection with such transition services, Seller Parties shall not be required
to interact with Clients or continue to employ any personnel except the
Transition Services Employees in accordance with Section 5.3(a). Purchaser shall
reimburse Seller within ten (10) days after receipt of an invoice from Seller
for such services. Seller Parties make no warranties, express or implied, with
respect to the transitional services to be provided by the Seller Parties to
Purchaser hereunder.

 

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(c)       On the Closing Date, Purchaser shall offer employment to at least
eighty-percent (80%) of the In-Scope Employees engaged in the Business at the
Closing Date (the “Retained Employees”). The selection of the Retained Employees
shall be mutually agreeable to Purchaser and Seller. Each Retained Employee
shall be offered employment with Purchaser at a salary equivalent to the salary
paid to that employee by Seller at the time of Closing, and will be entitled to
benefits consistent with the benefits provided to employees of Purchaser in
similar positions at the time of Closing. With respect to any employee benefit
plan maintained by Purchaser for the benefit of the Retained Employees who
accept employment with the Purchaser, Purchaser shall recognize all service of
such Retained Employees with Seller, as if such service were with Purchaser, for
vesting, eligibility and accrual purposes consistent with the provisions of such
benefit plans.

 

(i)       Seller Parties shall make any and all severance payments to Seller’s
In-Scope Employees engaged in the Business at the time of the Closing who are
not offered employment by Purchaser. The amount of severance per employee shall
not exceed the lesser of one (1) week’s compensation per full year of service,
or four (4) weeks’ compensation. Purchaser shall reimburse Seller Parties in an
amount equal to fifty-percent (50%) of the severance payments made by Seller to
each In-Scope Employee not offered employment by Purchaser, subject to each
In-Scope Employee’s execution of a mutually agreed upon severance agreement and
release.

 

5.4       Accounts Receivable. Seller Parties shall retain all accounts
receivable invoiced prior to the Closing Date (the “Retained Receivables”). At
Closing, Seller Parties will deliver to Purchaser a schedule of all Retained
Receivables. During the 180-day period following the Closing Date, the Purchaser
will diligently attempt to collect for the benefit of Seller Parties the
Retained Receivables. Purchaser will not discount any of the Retained
Receivables without the consent of Seller Parties, which shall not be
unreasonably withheld. The Purchaser shall hold and pay to Seller Parties any
and all proceeds of Retained Receivables received by Purchaser within ten (10)
calendar days of receipt. The Purchaser acknowledges that all of the Retained
Receivables remain the property of Seller Parties and Purchaser shall not
acquire any beneficial right or interest therein. In the event Purchaser
receives payment from a Client who has more than one invoice outstanding at the
time of payment, the payment shall be applied to the invoice which such payment
shall be reasonably inferred to apply to and, in the event that no such
reasonable inference can be made, the payment shall be applied to the oldest
outstanding invoice. Seller Parties may continue to collect any unpaid Retained
Receivables after the end of such 180-day period. Seller Parties represent that
the Retained Receivables reflect amounts that were invoiced by Seller in the
Ordinary Course of Business and remain due and owing. After the Closing Date,
Seller Parties shall promptly forward to Purchaser any Client payments that
result from services invoiced by the Purchaser after the Closing Date.

 

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5.5       Assignment of Leases. If the consent of the landlord to the assignment
of any Lease intended to be assigned to Purchaser hereunder is not obtained
prior to the Closing, the Seller Parties shall use their Best Efforts to
cooperate to obtain the necessary consent to assign such Lease and in the
interim, shall use Best Efforts to provide Purchaser with the economic and
non-economic benefits of such Lease, including, without limitation, enforcing
any rights under such Lease or permitting Purchaser to enforce any rights as if
such Lease had been assigned or transferred to Purchaser. Purchaser shall
reimburse Seller Parties promptly upon receipt of an invoice for all of the
Seller Parties’ out-of-pocket expenses incurred in connection with such Lease
until assigned to the Purchaser.

 

5.6       Vendor Payments. The Seller Parties shall remain fully and finally
responsible for any and all payments to any and all vendors for services
provided on or before the Closing Date.

 

5.7       Non-Solicitation.

 

(a)       For a period from the Closing until the third (3rd) anniversary of the
Closing Date, Seller Parties shall not directly or indirectly, own, manage,
operate, control or participate in the ownership, management, operation or
control of any business, whether in corporate, proprietorship or partnership
form or otherwise, engaged in the Business (a “Restricted Business”).

 

(b)       For a period from the Closing to the third (3rd) anniversary of the
Closing Date, Seller Parties shall not: (i) cause, solicit, induce or encourage
any Current Employee(s) of any Seller Parties who are or become employees of
Purchaser or any Affiliate of Purchaser to leave such employment or (ii) cause,
induce or encourage any material actual client, customer, supplier, or licensor
of the Business (including any Closing Date Clients and Former Clients and any
Person that becomes a client or customer of the Business after the Closing) or
any other Person who has a material business relationship with the Business, to
terminate or modify in any material adverse respect any such actual relationship
with the Purchaser.

 

(c)       Seller Parties acknowledges that the restrictive period contained in
Section 5.6(a) and (b) is reasonable under the circumstances. Moreover, it is
the desire and intent of the parties that the provisions of Section 5.6(a) and
(b) be enforceable to the fullest extent permissible under the legal
requirements and public policies applied in each jurisdiction in which
enforcement is sought. Seller Parties specifically agrees that, in the event of
a breach or threatened breach of Section 5.6(a) and (b), the Purchaser would
suffer irreparable injury and damages at law would be an insufficient remedy,
and the Purchaser shall be entitled to seek equitable relief by way of temporary
or permanent injunction (or any other equitable remedies), without proof of
actual damages and without the need to post bond or other security.

 

(d)       Notwithstanding anything in this Section 5.7 to the contrary, the
Seller Parties shall not be restricted from providing any Business Services to
its Affiliates, affiliated hospitals and other Persons that have clinical or
strategic affiliations with

 

5.8       Change of Name.

 

Immediately after the Closing, the Seller shall change its name to a name that
is reasonably satisfactory to Purchaser and Seller Parties; provided that the
Seller shall be allowed to use such name in connection with collection of the
Retained Receivables.

 

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5.9       Transfer Taxes. The Seller Parties shall duly and timely file all Tax
Returns relating to Transfer Taxes and all Transfer Taxes shall be borne equally
between Seller Parties and Purchaser, and timely paid by Seller Parties. The
Seller shall provide the Purchaser with a copy of each Tax Return relating to a
Transfer Tax promptly after filing, together with proof of payment of any
Transfer Tax shown thereon to be due.

 

5.10       Bulk Sales Laws. The Seller Parties and the Purchaser each hereby
waive compliance with any bulk sales laws that may be applicable in connection
with the Transactions.

 

5.11       Financial Statements.

 

(a)       Not later than April 1, 2019, Seller Parties shall engage Wojeski &
Company (the “Accounting Firm”) to conduct an audit (“Audit”) of the separate
balance sheets of the Seller and Seller Subsidiaries as of December 31, 2017 and
2018 and related separate statements of income and cash flows for the years then
ended (the “Annual Financial Statements”) and a review (“Review”) of the
separate balance sheet of Seller and Seller Subsidiaries as of March 31, 2019
and the related separate statements of income and cash flows for the quarter
then ended (the “2019 Quarterly Financial Statements”). Seller Parties will
provide full cooperation and access to work papers and support materials as
requested by the Accounting Firm in connection with the work required to
complete the Audit and Review, which is to be completed on or before May 31,
2019. The Purchaser shall bear all of the fees and expenses of the Accounting
Firm in connection with the Audit and Review. At the conclusion of the Audit,
and Review Seller Parties will execute a management representation letter
reasonably acceptable to the Accounting Firm and such other documents and
representations reasonably requested by the Purchaser, accountants and legal
advisors in furtherance of timely complying with Purchaser’s SEC requirements.
The Seller Parties will use their Best Efforts so that the Financial Statements
are prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered and present fairly in all material respects the financial
position of the Seller Parties as of the respective dates thereof and the
results of operations and cash flows of the Seller for the periods covered
thereby. The Seller Parties will not bear any Liability to the Purchaser if the
Annual Financial Statements and 2019 Quarterly Financial Statements cannot be
completed in a timely manner through no fault of the Seller Parties.

 

(b)       Upon execution of this Agreement, Seller Parties shall provide
Purchaser the unaudited statements of operations of the Seller Parties for the
years ended December 31, 2017 and December 31, 2018. Except as set forth on Part
5.11(a) of the Disclosure Schedule, Seller Parties represent that these
statements of operations are fairly presented in all material respects.

 

5.12       Business Records. Purchaser shall maintain the Business Records in
compliance with all applicable Legal Requirements. After Closing, Seller Parties
shall have full access, upon reasonable advance notice to Purchaser, to the
Business Records, as is reasonably necessary and subject to all applicable Legal
Requirements. Prior to the destruction of any Business Records delivered to
Purchaser, Purchaser shall notify Seller Parties of such proposed destruction
and shall offer Seller Parties the option, exercisable within 30 days after
Seller’s receipt of such notice, to retake possession and ownership of any such
Business Records.

 

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5.13       Public Announcement. Each Party shall (a) consult with each other
Party before issuing any press release or otherwise making any written public
statement with respect to the Transactions, (b) provide to the other Parties for
review a copy of any such press release or written public statement and (c) not
issue any such press release or make any such written public statement prior to
such consultation and review and the receipt of the prior consent of the other
Parties, which consent is not to be unreasonably withheld; provided, however,
that in the case of each of clauses (a) through (c), if such Party is required
by Legal Requirements applicable to such Party or its Affiliates including
regulations of any stock exchange applicable to such Party or its Affiliates,
the Party required to issue the press release or make written the public
statement shall, prior to issuing such press release or making such written
public statement, use its Best Efforts to allow the other Parties reasonable
time to comment on such release or written statement to the extent practicable.
Notwithstanding anything in this Agreement to the contrary, the Purchaser shall
not make any reference to or otherwise use the Name in any press release or
other public statement.

 

6.       Termination.

 

6.1       Termination Events. This Agreement may be terminated prior to the
Closing Date:

 

(a)       by mutual consent of the Purchaser and Seller Parties;

 

(b)       by either Purchaser or any Seller Parties if:

 

(i)       the Transactions contemplated by this Agreement have not been
consummated on or before April 30, 2019 (the “End Date”); provided that the
right to terminate this Agreement pursuant to this Section 6.1(b)(i) shall not
be available to any Party whose failure to fulfill in any material respect any
of its obligations under this Agreement has been the primary cause of, or the
primary factor that resulted in the failure of the Transactions contemplated by
this Agreement to be consummated by such time; or

 

(ii)       there shall be any applicable Legal Requirement that (a) makes the
consummation of this Transaction and other Transaction contemplated by this
Agreement illegal or otherwise prohibited; or (b) enjoins a Party from
consummating the acquisition and the other Transactions contemplated by this
Agreement and such enjoinment shall have become final and non-appealable.

 

(c)       by any Seller Parties, if:

 

(i)       there has been a material breach by the Purchaser of any
representation, warranty, covenant or agreement contained in this Agreement that
has prevented or would prevent the satisfaction of any condition to the
obligations of Seller Parties at the Closing, and such breach has not been
waived by Seller Parties in writing or, to the extent curable, cured by the
Purchaser within ten (10) business days after receipt by the Purchaser of
written notice thereof from Seller; and

 

(ii)       No Seller Party is in breach of any representation, warranty,
covenant or agreement contained in this Agreement.

 

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(d)       by Purchaser, if:

 

(i)       Purchaser shall have served notice on the Seller Parties of a
Diligence Termination; or

 

(ii)       there has been a material breach by any Seller Parties of any
representation, warranty, covenant or agreement contained in this Agreement that
has prevented or would prevent the satisfaction of any condition to the
obligations of the Purchaser at the Closing and such breach has not been waived
by the Purchaser or, to the extent curable, cured by the respective Seller
Parties within ten (10) business days after receipt by Seller Parties of written
notice thereof by the Purchaser, provided Purchaser is not in breach of any
representation, warranty, covenant or agreement contained in this Agreement.

 

6.2       Notice. The Party desiring to terminate this Agreement pursuant to
Section 6.1 shall give written notice to the other Party.

 

6.3       Effects of Termination. In the event of termination pursuant to
Section 6.1, this Agreement shall become void and of no effect without further
obligation or liability of any Party (or any subsidiaries, directors, officers,
employees, agents or representatives of any Party) to the other Parties hereto
(except for obligations of confidentiality and non-use with respect to the other
Party’s Confidential Information pursuant to the Mutual Nondisclosure Agreement,
which is incorporated herein by reference) and no Party shall be entitled to any
monetary damages or injunctive relief (including specific performance) as a
result of such termination, or any indemnification under ‎Section 4; provided,
that no such termination shall relieve any Party from any liability or losses
resulting from a knowing and/or intentional breach of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Transaction document prior to the date of termination.
Notwithstanding anything to the contrary contained herein, the obligations in
the Mutual Nondisclosure Agreement and Sections 5.2 (Confidentiality), 6.3
(Effects of Termination), 6.4 (Fees and Expenses) and 7 (Miscellaneous) hereof
shall remain in full force and effect.

 

6.4       Fees and Expenses. Except as otherwise specifically provided in the
Agreement, all fees and expenses incurred in connection with this Agreement, the
Transactions and the other transactions contemplated hereby shall be paid by the
Party incurring such fees or expenses, whether or not the Transactions are
consummated.

 

7.       Miscellaneous Provisions.

 

7.1       Further Assurances. Each Party hereto shall execute and/or cause to be
delivered to each other Party hereto such instruments and other documents, and
shall take such other actions, as such other Party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the Transactions.

 

7.2       Sole Representations and Warranties. The Parties make no
representations or warranties of any kind or nature, express or implied, at law
or in equity, except as expressly set forth in this Agreement or in any
certificate executed and delivered pursuant to this Agreement. Each Party hereby
expressly negates and disclaims, and will not be liable for, any and all
representations or warranties which may have been made or alleged to have been
made in any other document or instrument or in any statement or information made
or communicated to any other Party in any manner that is not expressly set forth
in this Agreement or any a certificate executed and delivered pursuant to this
Agreement.

 

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7.3       Notices. Any notice or other communication required or permitted to be
delivered to any Party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by electronic mail)
to the address set forth beneath the name of such Party below (or to such other
address as such Party shall have specified in a written notice given to the
other parties hereto):

 

if to any Seller Party:

 

Formativ Health Management, Inc.
Attn: Chief Executive Officer
130 East 59th Street
15th Floor
New York, NY 10022
Email:

 

With a copy to:

 

if to the Purchaser:

 

MTBC-Med, Inc.
7 Clyde Road
Somerset, NJ 08873
Attn: Shruti Patel, General Counsel
Facsimile: 732-227-8575
Email: spatel@MTBC.com

 

7.4       Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

 

7.5       Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement. Exchange of a signed emailed copy of
the Agreement shall be deemed sufficient for the purposes of binding the parties
to its constituents.

 

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7.6       Unattached Exhibits. The Parties acknowledge that certain Exhibits and
Schedules to this Agreement to be prepared by Seller Parties or Purchaser have
not been prepared or are incomplete at the time of execution of this Agreement.
Seller Parties and Purchaser shall proceed with diligence and in good faith to
prepare said exhibits and schedules and shall present same to the other Party
for its review and approval. All Exhibits and Schedules so approved shall be
initialed and dated by each Party and attached to this Agreement prior to the
Closing

 

7.7       Specific Performance. The Parties agree that: (a) in the event of any
Breach or threatened Breach by any Party of any covenant, obligation or other
provision set forth in this Agreement, the other Party shall be entitled to (i)
a decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach; and (b) neither the
non-breaching Party nor any other Indemnitee shall be required to provide any
bond or other security in connection with any such decree, order or injunction
or in connection with any related action or Proceeding.

 

7.8       Waiver.

 

(a)       No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.

 

(b)       No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.

 

7.9       Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser and the Seller Parties.

 

7.10       Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such court does
not exercise the power granted to it in the prior sentence, the parties hereto
agree to replace such invalid or unenforceable term or provision with a valid
and enforceable term or provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable term.

 

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7.11       Entire Agreement. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
Parties relating to the subject matter thereof.

 

7.12       Construction.

 

(a)       For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.

 

(b)       The Parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting Party shall not be
applied in the construction or interpretation of this Agreement.

 

(c)       As used in this Agreement, the words “include” and “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words “without limitation.”

 

(d)       Except as otherwise indicated, all references in this Agreement to
“Sections” and “Exhibits” are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.

 

(e)       Unless otherwise specified, any reference to any agreement (including
this Agreement), instrument, or other document includes all schedules, exhibits,
or other attachments referred to therein, and any reference to a statute or
other law includes any rule, regulation, ordinance, or the like promulgated
thereunder, in each case, as amended, from time to time.

 

(f)       The word “amend” means amend, modify, supplement, or restate, and
“amendment” has a correlative meaning; “any” means any one, more than one, or
all; “or” means “and/or;” and, unless otherwise specified, any financial or
accounting term has the meaning of the term under GAAP.

 

7.13       Choice of Law and Venue. This Agreement shall be interpreted,
construed and enforced in all respects in accordance with the laws of the State
of New York, with the exception of its conflict of laws rules. Any action to
enforce the provisions of this Agreement or arising under or by reason of this
Agreement shall be brought exclusively in the courts of the State of New York.

 

7.14       Waiver of Jury Trial. ALL PARTIES HERETO EACH HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.

 

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7.15       No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the Parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

 

7.16       Non-Recourse. This Agreement may only be enforced against, and any
claim, action, suit or other legal proceeding based upon, arising out of, or
related to this Agreement, or the negotiation, execution or performance of this
Agreement, may only be brought against the entities that are expressly named as
parties hereto and then only with respect to the specific obligations set forth
herein with respect to such Party. No past, present or future director, officer,
employee, incorporator, manager, member, partner, stockholder, Affiliate, agent,
attorney or other Representative of any Party hereto or of any Affiliate of any
party hereto, or any of their successors or permitted assigns, shall have any
liability for any obligations or liabilities of any party hereto under this
Agreement or for any claim, action, suit or other legal proceeding based on, in
respect of or by reason of the transactions contemplated hereby

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
duly executed and delivered in its name and on its behalf, all as of the day and
year first above written.

 

  ETRANSMEDIA TECHNOLOGY, INC.   a New York corporation         By: /s/ Laurence
Kraemer   Name: Laurence Kraemer   Title: General Counsel         FORMATIV
HEALTH MANAGEMENT, INC.   a Delaware corporation         By: /s/ Laurence
Kraemer   Name: Laurence Kraemer   Title: General Counsel         ASSOCIATED
BILLING SERVICES, LLC.   a Delaware limited liability company         By: /s/
Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel

 

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  DOCTORSXL HOLDINGS, LLC.   a Delaware limited liability company         By:
/s/ Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel        
HARRT ASSOCIATES, LLC.   a Delaware limited liability company         By: /s/
Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel         MEDI
BILLING SOLUTION SERVICES, LLC.   a Delaware limited liability company        
By: /s/ Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel      
  MEDI-CLAIM SERVICES, LLC.   a Delaware limited liability company         By:
/s/ Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel        
MEDIGISTICS, LLC.   a Florida limited liability company         By: /s/ Laurence
Kraemer   Name: Laurence Kraemer   Title: General Counsel

 

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  ARCHIIVUS, LLC.   a Delaware limited liability company         By: /s/
Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel        
DOCTORSXL, LLC.   a Nevada limited liability company         By: /s/ Laurence
Kraemer   Name: Laurence Kraemer   Title: General Counsel         ASSOCIATED
BILLING SERVICES, INC.   an Arizona corporation         By: /s/ Laurence Kraemer
  Name: Laurence Kraemer   Title: General Counsel         MEDI BILLING SOLUTION
SERVICES, INC.   a Delaware corporation         By: /s/ Laurence Kraemer   Name:
Laurence Kraemer   Title: General Counsel         MEDI-CLAIM SERVICES, INC.   a
Delaware corporation         By: /s/ Laurence Kraemer   Name: Laurence Kraemer  
Title: General Counsel         MEDIGISTICS, INC.   a Ohio corporation        
By: /s/ Laurence Kraemer   Name: Laurence Kraemer   Title: General Counsel      
  MTBC-MED, INC.,   a Delaware corporation         By: /s/ Shruti Patel   Name:
Shruti Patel   Title: General Counsel

 

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