Exhibit 10.18

 

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

SECURITIES PURCHASE AGREEMENT

BY AND AMONG

ADAPTHEALTH LLC,

MCKESSON MEDICAL-SURGICAL, INC.,

AS SELLER

AND

NRE HOLDING CORPORATION, AND

MCKESSON PATIENT CARE SOLUTIONS, INC.,

AS THE COMPANY GROUP

Dated as of November 21, 2019

 

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

    

    

    

Page

 

ARTICLE 1 DEFINITIONS

 

1 

 

ARTICLE 2 PURCHASE AND SALE

 

11 

 

2.1

 

Purchase and Sale

 

11 

 

2.2

 

Purchase Price; Payments by Buyer.

 

11 

 

2.3

 

Closing

 

12 

 

2.4

 

Purchase Price Adjustment

 

12 

 

2.5

 

Tax Withholding

 

14 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP

 

14 

 

3.1

 

Organization and Qualification; Subsidiaries

 

15 

 

3.2

 

Authorization

 

15 

 

3.3

 

Capitalization.

 

15 

 

3.4

 

Non-contravention

 

16 

 

3.5

 

Financial Statements

 

16 

 

3.6

 

Absence of Undisclosed Liabilities

 

16 

 

3.7

 

Subsequent Events; No Material Adverse Effect

 

17 

 

3.8

 

Legal Compliance

 

17 

 

3.9

 

Tax Matters

 

17 

 

3.10

 

Real Property

 

18 

 

3.11

 

Personal Property

 

18 

 

3.12

 

Intellectual Property

 

18 

 

3.13

 

Contracts.

 

19 

 

3.14

 

Litigation

 

20 

 

3.15

 

Employee Benefits

 

20 

 

3.16

 

Environmental Matters

 

21 

 

3.17

 

Labor Matters

 

21 

 

3.18

 

Insurance Policies

 

21 

 

3.19

 

Affiliated Transactions

 

22 

 

3.20

 

Material Customers and Material Suppliers.

 

22 

 

3.21

 

Brokers’ Fees

 

22 

 

3.22

 

Healthcare Compliance.

 

22 

 

3.23

 

HIPAA

 

24 

 

3.24

 

Fraud.

 

24 

 

3.25

 

No Other Representations and Warranties

 

24 

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

25 

 

4.1

 

Authorization

 

25 

 

4.2

 

No Conflict; Required Filings and Consents

 

25 

 

4.3

 

Title

 

25 

 

4.4

 

No Brokers

 

25 

 

4.5

 

No Other Representations and Warranties

 

25 

 

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER

 

26 

 

5.1

 

Organization and Qualification

 

26 

 

 

 

 

 

 

 

 

 

 

    

    

    

Page

 

5.2

 

Authorization

 

26 

 

5.3

 

Non-contravention

 

27 

 

5.4

 

Brokers’ Fees

 

27 

 

5.5

 

Litigation

 

27 

 

5.6

 

Sufficient Funds

 

27 

 

5.7

 

Solvency

 

27 

 

5.8

 

Condition of Business

 

28 

 

ARTICLE 6 CONDUCT PRIOR TO THE CLOSING

 

28 

 

6.1

 

Conduct of Business

 

28 

 

6.2

 

Access and Information

 

29 

 

ARTICLE 7 ADDITIONAL AGREEMENTS

 

30 

 

7.1

 

Appropriate Actions; Consents; Filings

 

30 

 

7.2

 

Confidentiality; Public Announcements

 

31 

 

7.3

 

Exclusivity

 

31 

 

7.4

 

Employee Matters

 

32 

 

7.5

 

Name Change.

 

32 

 

7.6

 

Debt

 

32 

 

7.7

 

Tax Matters

 

32 

 

7.8

 

Indemnification of Directors, Managers and Officers

 

36 

 

7.9

 

Taking of Necessary Action; Further Action

 

36 

 

7.10

 

Transfer of Distribution Centers

 

36 

 

7.11

 

Completion of Service Schedule.

 

36 

 

ARTICLE 8 CONDITIONS TO CLOSING

 

36 

 

8.1

 

Conditions to the Obligations of Each Party

 

36 

 

8.2

 

Additional Conditions to the Obligations of Buyer

 

37 

 

8.3

 

Additional Conditions to the Obligations of the Seller

 

38 

 

8.4

 

Frustration of Closing Conditions

 

39 

 

ARTICLE 9 INDEMNIFICATION; RELEASE

 

39 

 

9.1

 

Indemnification by the Seller

 

39 

 

9.2

 

Indemnification by Buyer

 

39 

 

9.3

 

Survival; Time for Claims; Notice of Claims

 

39 

 

9.4

 

Liability Limitations

 

41 

 

9.5

 

Third Party Claims

 

43 

 

9.6

 

Direct Claims

 

45 

 

9.7

 

Treatment of Indemnification Payments

 

45 

 

ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER

 

45 

 

10.1

 

Termination

 

45 

 

10.2

 

Effect of Termination

 

46 

 

10.3

 

Fees and Expenses

 

46 

 

10.4

 

Amendments and Waivers

 

46 

 

10.5

 

Failure or Indulgence Not Waiver

 

47 

 

ARTICLE 11 GENERAL PROVISIONS

 

47 

 

11.1

 

Notices

 

47 

 

11.2

 

Headings

 

48 

 

11.3

 

Interpretation

 

48 

 

 

 

 

 

 

 

 

 

 

    

    

    

Page

 

11.4

 

Severability

 

49 

 

11.5

 

Entire Agreement

 

49 

 

11.6

 

Seller Disclosure Schedules

 

49 

 

11.7

 

Assignment

 

50 

 

11.8

 

Parties in Interest

 

50 

 

11.9

 

Specific Performance.

 

51 

 

11.10

 

Governing Law; Exclusive Jurisdiction

 

51 

 

11.11

 

Counterparts

 

52 

 

11.12

 

Waiver of Conflicts Regarding Representation

 

52 

 

 

 

List of Exhibits

Exhibit

Exhibit A               Net Working Capital Schedule

Exhibit B               Form of Transition Services Agreement (Service Schedule
Excluded)

Exhibit C               Form of Moorestown Facility License Agreement

Exhibit D               Form of Auburn Facility Sublease

 

 

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of November 21, 2019, by and among (a) AdaptHealth LLC, a Delaware limited
liability company (“Buyer”), (b) McKesson Medical-Surgical, Inc., a Virginia
corporation (“Seller”), (c) NRE Holding Corporation, a Delaware corporation
(“NRE Holding”), and (d) McKesson Patient Care Solutions, Inc., a Pennsylvania
corporation (“PCS” and together with NRE Holding, each a “Company” and
collectively the “Company Group”). Unless the context otherwise requires, each
of Buyer and the Seller are referred to herein individually as a “Party” and
collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, Seller is the owner of all of the issued and outstanding Equity
Interests of NRE Holding;

 

WHEREAS, NRE Holding is the owner of all of the issued and outstanding Equity
Interests of PCS;

 

WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to
purchase and acquire from the Seller, all of the issued and outstanding Equity
Interests of NRE Holding (the “Acquired Equity”);

 

WHEREAS, the Board of Directors of the Seller (the “Seller Board”) and the Buyer
have determined that it is advisable and in the best interests of their
respective equity holders for Buyer to purchase the Acquired Equity upon the
terms and subject to the conditions set forth herein, and the Seller Board has
approved this Agreement and all of the transactions contemplated hereby
(collectively, the “Transactions”); and

 

NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the meanings set
forth below: “Accounting Firm” has the meaning set forth in Section 2.4(d).

 

“Acquired Equity” has the meaning set forth in the Recitals.

 

“Acquisition Engagement” has the meaning set forth in Section 11.12.

 

“Acquisition Proposal” means (i) any merger, liquidation, recapitalization,
consolidation or other business combination involving any member of the Company
Group, (ii) any issuance by any member of the Company Group of more than fifty
percent (50%) of its capital stock or (iii) any acquisition of all or
substantially all of the consolidated total assets of the Company Group, in each
case, other than the Transactions contemplated by this Agreement.

 

“Actual Cash” has the meaning set forth in Section 2.4(b).

1

 

“Actual Debt” has the meaning set forth in Section 2.4(b).

 

“Actual Net Working Capital” has the meaning set forth in Section 2.4(b).

 

“Actual Transaction Expenses” has the meaning set forth in Section 2.4(b).

 

“Affiliate” means, with respect to any specified Person, any individual or
entity whatsoever directly or indirectly controlling, controlled by, or under
the same control with, such Person, with the term "control", when used in
respect of any entity, meaning the right (including by unrestricted exercise of
voting rights) to unilaterally appoint a majority of the board of directors or
other governing body elected by equity holders of that entity).

 

“Aggregate Cap” has the meaning set forth in Section 9.4(c)(iii).

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Annual Financial Statements” has the meaning set forth in Section 3.5(a).

 

“Applicable Survival Period” has the meaning set forth in Section 9.3(b).

 

“Attorney-Client Communications” has the meaning set forth in Section 11.12.

 

“Auburn Facility Sublease” has the meaning set forth in Section 8.2(m).

 

“Balance Sheet Date” has the meaning set forth in Section 3.5(a).

 

“Bonus Opportunities” has the meaning set forth in Section 7.4(a).

 

“Broker” means Piper Jaffray & Co.

 

“Business” means the business of marketing, selling, leasing, distributing or
otherwise providing durable medical equipment and related supplies to customers
in their homes, hospitals, or other alternative site care facilities.

 

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions located in Las Colinas, Texas are authorized or
obligated by law or executive order to close.

 

“Buyer Certificate” has the meaning set forth in Section 2.4(b).

 

“Buyer Indemnified Party” has the meaning set forth in Section 9.1.

 

“Buyer Indemnifying Parties” has the meaning set forth in Section 9.2.

 

“Buyer Representatives” has the meaning set forth in Section 6.2.

 

“Buyer Terminable Breach” has the meaning set forth in Section 10.1(b).

 

“Cash” means all cash, cash equivalents (including money market accounts, money
market funds, money market instruments, certificates of deposit, demand deposits
and restricted cash), the Lease Deposits and marketable securities of the
Company Group, determined on a consolidated basis. For the avoidance of doubt,
“Cash” shall be calculated net of all issued but uncleared checks and drafts
issued by the Company Group to the extent the related accounts payable is not
included in the calculation of Net

2

 

 

Working Capital and shall include all checks and wire transfers and drafts
deposited or available for deposit for the account of the Company Group.

 

“Cash Payment” means the amount equal to (a) Fourteen Million Dollars
($14,000,000), plus (b) the Estimated Cash, minus (c) the Estimated Debt, minus
(d) the Estimated Transaction Expenses, plus or minus (as applicable pursuant to
Section 2.4(a)) (e) the working capital adjustment amount.

 

“Civil Investigative Demand” means a civil investigative demand issued pursuant
to 31 U.S.C. § 3733.

 

“Closing” has the meaning set forth in Section 2.3.

 

“Closing Balance Sheet” has the meaning set forth in Section 2.4(b).

 

“Closing Date” has the meaning set forth in Section 2.3.

 

“Closing Statement” has the meaning set forth in Section 2.2(b).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Approvals” means, any consent, license, permit, approval, waiver or
authorization or order of, filings with or any notification to any third-Person
or Governmental Authority required as a result of the Transactions.

 

“Company Group” has the meaning set forth in the preamble to this Agreement.

 

“Company Material Adverse Effect” means, with respect to the Company Group,
taken as a whole, any event, occurrence, condition or change that is materially
adverse to (a) the business, results of operations, financial condition or
assets of the Company Group, taken as a whole, or (b) the ability of the Company
Group to consummate the Transactions on a timely basis; provided, however, that
“Company Material Adverse Effect” shall not include any event, occurrence,
condition or change, directly or indirectly, arising out of or attributable to:
(i) general economic or political conditions; (ii) conditions generally
affecting the industries in which the Company Group operates; (iii) any changes
in financial or securities markets in general; (iv) acts of war (whether or not
declared), armed hostilities or terrorism, or the escalation or worsening
thereof; (v) any action taken or failed to be taken pursuant to or in accordance
with this Agreement or at the request of, or consented to by, the Buyer; (vi)
any action required or permitted by this Agreement; (vii) any changes in
accounting rules, including GAAP; or (viii) the public announcement, pendency or
completion of the Transactions; notwithstanding the foregoing, however, that any
event, occurrence condition or change referred to in clauses (i) through (vii)
immediately above shall be taken into account in determining whether a Company
Material Adverse Effect has occurred or could reasonably be expected to occur to
the extent that such event, occurrence condition or change has a
disproportionate effect on the Company Group compared to other participants in
the industries in which the Company Group conducts its businesses.

 

“Company Parties” has the meaning set forth in Section 11.12.

 

“Company Plan” has the meaning set forth in Section 3.15(a).

 

“Company Representatives” has the meaning set forth in Section 7.3.

3

 

“Company Terminable Breach” has the meaning set forth in Section 10.1(c).

 

“Competition Law” shall mean any Law that is designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition.

 

“Confidentiality Agreement” means that certain letter agreement, effective as of
May 2, 2019, by and between Buyer and Seller or an Affiliate of Seller.

 

“Contract” means any legally binding, written contract, agreement, lease,
obligation, commitment or undertaking.

 

“Current Assets” means the Company Group’s consolidated total current assets,
determined in accordance with the Net Working Capital Schedule (excluding all
Cash).

 

“Current Liabilities” means the Company Group’s consolidated total current
liabilities, determined in accordance with the Net Working Capital Schedule
(excluding (a) any Debt and (b) Transaction Expenses); provided,  further, that
any other amount payable from the Purchase Price that would otherwise be
considered a Current Liability shall not be included as a Current Liability.

 

“Damages” means all actual damages, costs, liabilities, obligations, fines,
penalties, expenses and fees, including reasonable attorneys’ and other
professional fees and expenses.

 

“Debt” means, without duplication, any liability of any member of the Company
Group in respect of (a) indebtedness for borrowed money or evidenced by notes,
bonds, debentures or similar instruments; (b) guarantees of the obligations
described in the foregoing clause (a) above of any other Person; or (c) all
accrued interest on the foregoing; provided,  however, that, for purposes of
clarity, notwithstanding anything to the contrary herein, “Debt” shall not
include any (i) Transaction Expenses, (ii) trade payables and Current
Liabilities, (iii) capital lease obligations, (iv) deferred revenue, (v) letters
of credit, performance bonds, bankers acceptances, indemnities and similar
obligations entered into in the ordinary course of business or (vi) any items of
the nature described above incurred by Buyer or its Affiliates prior to or
following the Closing.

 

“Deductible” has the meaning set forth in Section 9.4(b).

 

“Delaware Courts” has the meaning set forth in Section 11.10(b).

 

“Direct Claim” has the meaning set forth in Section 9.6.

 

“Employee Plan” means any plan, program, policy, arrangement or Contract,
whether or not reduced to writing, and whether covering a single individual or a
group of individuals, that is (a) an employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, (b) an employee pension benefit plan within
the meaning of Section 3(2) of ERISA, (c) an equity bonus, equity purchase,
equity option, restricted equity, equity appreciation right or similar
equity-based plan or (d) any other deferred- compensation, retirement,
severance, welfare-benefit, reimbursement, bonus, profit-sharing, incentive or
fringe-benefit plan, program or arrangement.

 

“Environmental Laws” means any applicable Laws that pertain to the protection of
the environment, protection of public health and safety, or protection of worker
health and safety, or that pertain to the handling, use, manufacturing,
processing, storage, treatment, transportation, discharge, release, emission,
disposal, re-use or recycling of Hazardous Materials, including the federal

4

 

Comprehensive Environmental Response, Compensation
and  Liability  Act  of  1980,  42  U.S.C.  Section 9601, et seq., as amended,
the federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., as amended, the European Union RoHS Directive and the Waste Electrical and
Electronic Equipment Directive.

 

“Equity Interest” means, with respect to any Person, (a) any capital stock,
partnership or membership interest, unit of participation or other similar
interest (however designated) in such Person, and (b) any option, warrant,
purchase right, conversion right, exchange right or other Contract that would
entitle any other Person to acquire any such interest in such Person or
otherwise entitle any other Person to share in the equity, profits, earnings,
losses or gains of such Person (including equity appreciation, phantom equity,
profit participation or other similar rights).

 

“Estimated Cash” has the meaning set forth in Section 2.4(a).

 

“Estimated Debt” has the meaning set forth in Section 2.4(a).

 

“Estimated Net Working Capital” has the meaning set forth in Section 2.4(a).

 

“Estimated Transaction Expenses” has the meaning set forth in Section 2.4(a).

 

“Excluded Documents” means, collectively, the Restrictive Covenant Agreement,
the Moorestown Facility License Agreement, the Auburn Facility Sublease and the
Transition Services Agreement.

 

“Financial Statements” has the meaning set forth in Section 3.5(a).

 

“Fraud”, with respect to the Seller and the Company Group, means actual and
intentional fraud, committed by the Knowledge Persons with actual knowledge,
with respect to the making of the representations and warranties expressly set
forth in ARTICLE 3 and ARTICLE 4 of this Agreement with actual knowledge of
breach when the related representations and warranties were made with the
express intention that a party to this Agreement would rely thereon to its
detriment, and does not include any  other form of fraud or misrepresentation
(whether reckless, negligent, constructive or otherwise).

 

“Fundamental Damages” means Damages incurred or sustained by, or imposed upon,
the Buyer Indemnified Parties to the extent resulting from or arising out of any
breach of any Fundamental Representations of the Company Group.

 

“Fundamental Damages Cap” has the meaning given in Section 9.4 (c)(ii).

 

“Fundamental Representations” means, (a) with respect to the Company Group, the
representations and warranties set forth in Sections 3.1  (Organization and
Qualification; Subsidiaries),

3.2  (Authorization), 3.3  (Capitalization), 3.9  (Tax Matters)  3.21  (Brokers
Fees), 3.22  (Healthcare Compliance), and 3.24 (Fraud), (b) with respect to the
Seller, the representations and warranties set forth in Sections 4.1
 (Authorization), 4.3  (Title) and 4.4  (No Brokers) and (c) with respect to
Buyer, the representations and warranties set forth in ARTICLE 5.

 

“GAAP” means generally accepted accounting principles in effect in the United
States, as consistently applied by the Company Group.

 

“General Cap” has the meaning set forth in Section 9.4(c)(i).

5

 

“General Survival Date” has the meaning set forth in Section 9.3(a)(i).

 

“Governing Documents” means, with respect to any business entity, all documents
by which such entity established its legal existence or which govern its
internal corporate affairs, including, without limitation, its articles of
incorporation, articles of organization, limited partnership agreement,
operating agreement, limited liability company agreement, bylaws and any other
governing document, as applicable, of such entity.

 

“Government Health Care Program” means any federal or state health programs as
defined in 42 U.S.C. § 1320a-7b(f).

 

“Government Health Care Program Repayment Damages” means any Damages in
connection with a repayment, recoupment or refund for overpayments made by a
Government Health Care Program prior to the Closing Date which directly result
from a breach by the Company Group of any  representation or warranty set forth
in Section 3.22  (Healthcare Compliance).

 

“Governmental Authority” means any court, administrative agency, commission or
other United States, federal, national, provincial, state, local, foreign or
other governmental authority, instrumentality, agency or commission, in each
case, to the extent the same has jurisdiction over the Person, assets or
property in question.

 

“Health Care Laws” means all Laws relating to the regulation, provision or
administration of, or payment for, healthcare products or services, including,
but not limited to (a) any and all federal and state fraud and abuse Laws,
including the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7(b)), the Stark
Law (42 U.S.C. § 1395nn and § 1395(q)), the civil False Claims Act (31 U.S.C. §
3729 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United States
Code, the False Statements Relating to Health Care Matters law (18 U.S.C. §
1035), Health Care Fraud (18 U.S.C. § 1347), all state self-referral
prohibitions, anti-kickback Laws, illegal remuneration and provider conflict of
interest Laws, or any regulations promulgated pursuant to such statutes, or
similar state or local statutes or regulations; (b) the federal Food, Drug &
Cosmetic Act (21 U.S.C. §§ 310 et seq.) and other federal and state requirements
concerning the distribution of Legend Drugs and Legend Devices; (c) Medicare
(Title XVIII of the Social Security Act) and the conditions of participation and
regulations promulgated thereunder; (d) Medicaid (Title XIX of the Social
Security Act) and the regulations promulgated thereunder; (e) TRICARE (10 U.S.C.
§ 1071 et seq.) and the regulations promulgated thereunder (f) the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No.
108-173) and the regulations promulgated there under; (g) all Laws relating to
healthcare-related licensure, certification or registration requirements of all
Governmental Authorities applicable to any member of the Company Group (h)
quality, safety and accreditation requirements to the extent required by
applicable state laws or governmental regulatory bodies; and (i) statutory and
regulatory requirements relating to the billing or submission of claims,
collection of accounts receivable, underwriting the cost of, or provision of
management or administrative services in connection with, Government Health Care
Programs, by any member of the Company Group, including Laws and regulations
relating to professional fee splitting, certificates of need, and certificates
of operations and authority. Health Care Laws do not include any Privacy Laws.

 

“Indemnified Party” means a Buyer Indemnified Party or a Seller Indemnified
Party, as applicable.

 

“Indemnified Taxes” means any (a) Taxes of any member of the Company Group for
Pre-Closing Tax Periods (determined in accordance with Section 7.7(e) with
respect to any Straddle Period), (b) income Taxes for any Pre-Closing Tax Period
of any member (other than any member of the Company Group) of an affiliated,
consolidated, combined, or unitary group of which any member of the Company

 

6

 

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

Group is or was a member on or prior to the Closing Date pursuant to Treasury
Regulations Section 1.1502-6 (or any analogous provision of state, local or
foreign Tax Law), and (c) Taxes for any Pre- Closing Tax Period of any Person
(other than any member of the Company Group) imposed on any member of the
Company Group by contract (other than any contract the principal purpose of
which is not Taxes), as a transferee or successor or by operation of Law, which
Taxes relate to an event or transaction occurring before the Closing. For the
avoidance of doubt, “Indemnified Taxes” shall not include any Transfer Taxes.

 

“Indemnifying Party” means a Buyer Indemnifying Party or Seller, as applicable.

 

“Intellectual Property” means all worldwide (a) patents (including but not
limited to continuations, continuations-in-part, divisionals, renewals,
reissues, and extensions thereof), inventions, whether patentable or not, and
whether reduced to practice or not, (b) copyrights in any work of authorship,
(c) trademarks, service marks, Internet domain names, URLs, logos, trade names
and trade dress, corporate names and other source indicators, and all goodwill
related thereto, (d) trade secrets, and (e) all registrations and applications
(including, without limitation, provisional applications), renewals, reissues
and extensions for any of the foregoing.

 

“Interim Balance Sheet” has the meaning set forth in Section 3.5(a).

 

“Interim Financial Statements” has the meaning set forth in Section 3.5(a).

 

“IRS” means the U.S. Internal Revenue Service.

 

“Knowledge of the Seller” or “to the Seller’s Knowledge” means, with respect to
any fact,
circumstance,  event  or  other  matter  in  question,   the   actual   knowledge   of   any   of   the   following
individuals: [***] (collectively, the “Knowledge Persons”).

 

“Law” or “Laws” means any applicable federal, national, provincial, state,
local, United States, foreign or other statute, law, ordinance, regulation,
rule, code, decree, judgment, writ, injunction or    other order, or other
requirement or rule of law.

 

“Lease Deposits” means the security deposits made in connection with Real
Property Leases set forth on Schedule 3.10(b).

 

“Legal Proceeding” has the meaning set forth in Section 11.10(b).

 

“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
charge, easement, encroachment or other similar lien.

 

“Material Contract” has the meaning set forth in Section 3.13(a).

 

“Material Customers” has the meaning set forth in Section 3.20(a).

 

“Material Permits” has the meaning set forth in Section 3.8.

 

“Material Suppliers” has the meaning set forth in Section 3.20(b).

 

“Mini-Basket” has the meaning set forth in Section 9.4(a).

 

“MMM” has the meaning set forth in Section 11.12.

 

7

 

“Moorestown Facility License Agreement” has the meaning set forth in Section
8.2(l).

 

“Multiemployer Plan” means: (i) any “multiemployer
plan”  as  such  term  is  defined  in  Section 3(37) of ERISA; (ii) any
“multiple employer plan” as such term is defined in Section 413(c) of the Code;
and (iii) any “multiple employer welfare arrangement” (as defined in Section
3(40) of ERISA).

 

“Net Working Capital” means (a) Current Assets (but excluding Cash and all
deferred Tax assets), minus (b) Current Liabilities (but excluding deferred Tax
liabilities), all as more particularly described and set forth in the Net
Working Capital Schedule.

 

“Net Working Capital Certificate” means a certificate prepared by an officer of
the Company Group or Seller, certifying the Estimated Net Working Capital,
Estimated Cash, Estimated Transaction Expenses and Estimated Debt as set forth
on the Closing Statement, and the amount, if any, by which (a) Estimated Net
Working Capital exceeds the Target Net Working Capital or (b) the Estimated Net
Working Capital is less than the Target Net Working Capital.

 

“Net Working Capital Schedule” means the schedule pursuant to which Net Working
Capital is to be calculated, attached as Exhibit A hereto, which calculation on
Exhibit A is based for illustrative purposes on Net Working Capital as of
October 31, 2019.

 

“Notice of Claim” has the meaning set forth in Section 9.3(b).

 

“Objection Notice” has the meaning set forth in Section 2.4(c).

 

“Outside Date” has the meaning set forth in Section 10.1(e).

 

“Party” or “Parties” has the meaning set forth in the preamble to this
Agreement.

 

“Permitted Liens” means: (a) Taxes, assessments and other governmental levies,
fees, or charges that are (i) not due and payable as of the Closing Date or (ii)
being contested by appropriate proceedings; (b) mechanics’ liens and similar
liens for labor, materials, or supplies provided with respect to real property
incurred in the ordinary course of business for amounts that are (i) not
delinquent and that would not, in the aggregate, have a Company Material Adverse
Effect or (ii) being contested by appropriate proceedings; (c) zoning, building
codes, and other land use laws regulating the use or occupancy of real property
or the activities conducted thereon that are imposed by any Governmental
Authority having jurisdiction over real property; (d) liens for any financing
secured by real property; (e) easements, covenants, conditions, restrictions and
other similar matters affecting title to real property and other encroachments
and title and survey defects that do not or would not materially impair the use
or occupancy of real property in the operation of the business of the Company
Group, taken as a whole; and (f) non-exclusive licenses of Company owned
Intellectual Property by the Company or a Subsidiary in the ordinary course of
business.

 

“Person” means an individual or entity, including a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a Governmental
Authority (or any department, agency, or political subdivision thereof).

 

“Post-Transaction Employee” has the meaning set forth in Section 7.4.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and the portion of any Straddle Period ending on the Closing Date.

 

8

 

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

“Pre-Closing Tax Refund” means, without duplication, any and all refunds
(including refunds arising by reason of estimated Tax payments made on or before
the Closing Date) or credits of Taxes, together with any and all interest paid
or credited with respect thereto, (a) with respect to any Pre-Closing Tax Period
(determined in accordance with the principles set forth in Section 7.7(e) for
any Straddle Period) of any member of the Company Group; (b) with respect to any
amount indemnified by Seller pursuant to an obligation under ARTICLE 9; or (c)
with respect to any amount taken into account as a direct or indirect adjustment
in the calculation of the Purchase Price (as finally determined), including to
the extent included in the calculation of Actual Net Working Capital, Actual
Debt or Actual Transaction Expenses (each as finally determined in accordance
with Section 2.4).

 

“Privacy Laws” means (a) the Health Insurance Portability and Accountability Act
of 1996 (Pub. L. No. 104-191) and the regulations promulgated thereunder, (b)
Subtitle D of the Health Information Technology for Economic and Clinical Health
Act (the “HITECH Act”), also known as Title XIII of Division A and Title IV of
Division B of the American Recovery and Reinvestment Act of 2009, Public Law No.
111-005, and the regulations promulgated thereunder and (c) state privacy and
data security Laws and regulations.

 

“Public Filing” has the meaning set forth in Section 7.2(b).

 

“Purchase Price” has the meaning set forth in Section 2.2.

 

“Real Property Leases” has the meaning set forth in Section 3.10(b).

 

“Referral Source” means any physician, health care facility, hospital or
division or department thereof, nursing facility, home health agency or other
Person who is in a position to make or influence referrals to or recommendations
regarding, or otherwise generate business for, the Company Group.

 

“Representation” has the meaning set forth in Section 11.3.

 

“Restrictive Covenant Agreement” means the restrictive covenant agreement, by
and between Buyer and Seller, entered into on the date hereof.

 

“Scheduled Intellectual Property” has the meaning set forth in Section 3.12.

 

[***]

 

“Seller Board” has the meaning set forth in the recitals to this Agreement.

 

“Seller Indemnified Party” has the meaning set forth in Section 9.2.  

 

“Seller Tax Matter” has the meaning set forth in Section 7.7(f).

 

“Solvent” has the meaning set forth in Section 5.7.

 

“Specific Representation” has the meaning set forth in Section 11.3.  

 

“Specified Time” has the meaning set forth in Section 7.3

 

“Straddle Period” means any taxable period beginning on or before and ending
after the Closing Date.

 

9

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
trust, limited liability company, association or other business entity of which
(a) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a partnership,
limited liability company, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the time owned
or controlled, directly or indirectly, by any Person or one or more Subsidiaries
of that person or a combination thereof. For purposes hereof, a Person or
Persons shall be deemed to have a majority ownership interest in a partnership,
limited liability company, association or other business entity if such Person
or Persons shall be allocated a majority of partnership, limited liability
company, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership, limited
liability company, association or other business entity.

 

“Supplemental Disclosure Schedule” has the meaning set forth in Section 7.1(c).

 

“Supporting Documentation” has the meaning set forth in Section 2.4(b).

 

“Target Net Working Capital” means $16,000,000.

 

“Tax” means any federal, state, local or municipal, foreign or other tax
(including any income  tax, franchise tax, capital gains tax, gross receipts
tax, value-added tax, surtax, estimated tax, unemployment tax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, profits tax, capital stock tax, severance tax, occupation tax, windfall
profits tax, social security tax, disability tax, withholding tax or payroll
tax), and any fine, penalty, interest or addition to tax with respect thereto,
in each case, imposed by a Tax Authority.

 

“Tax Authority” means any Governmental Authority responsible for the imposition,
administration, assessment or collection of any Tax or the administration of any
Laws relating to Taxes.

 

“Tax Contest” has the meaning set forth in Section 7.7(d).

 

“Tax Representations” has the meaning set forth in Section 9.3(a).

 

“Tax Return” means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, in each case required
to be filed with any Tax Authority in connection with the imposition,
administration, assessment or collection of any Tax or the administration of any
Laws relating to Taxes.

 

“Third Party Claim” has the meaning set forth in Section 9.5(a).

 

“Transaction Documents” means this Agreement, the Seller Disclosure Schedules,
the closing certificates delivered pursuant to this Agreement, the annexes to
this Agreement, and all other documents, agreements, certificates and other
instruments expressly contemplated by this Agreement (excluding the Excluded
Documents).

 

“Transaction Expenses” means, without duplication, as of immediately prior to
the Closing and to the extent not paid prior to the Closing, (a) all third party
fees, costs and expenses relating to this Agreement and the Transactions that
are incurred at or prior to the Closing and are payable by the Seller or any
member of the Company Group to any financial advisor, broker, or finder or to
any attorney, accountant, consultant or other professional that rendered
services to the Seller or any member of the

 

10

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

Company Group in connection with this Agreement and the Transactions; and (b)
all liabilities for any change of control or similar bonuses payable by the
Seller or any member of the Company Group to any member of the Company Group’s
officers, directors, employees, consultants or contractors solely as a result of
the consummation of the Transactions; provided,  however, that notwithstanding
anything to the contrary set forth herein, “Transaction Expenses” shall not
include (i) any fees and costs relating to this Agreement and the Transactions
that are payable by any member of the Company Group for services following the
Closing or by the Buyer or its Affiliates in connection with the Transactions,
including any financings obtained by the Buyer, or Buyer’s Affiliates in
connection herewith, (ii) any amount which is included in the calculation of
Debt or Net Working Capital, or (iii) any amounts payable by the Seller on
behalf of any member of the Company Group in connection with the “tail” policy
pursuant to and in accordance with Section 7.8.

 

“Transactions” has the meaning set forth in the recitals to this Agreement.

 

“Transfer Taxes” has the meaning set forth in Section 7.7(b).

 

“Transition Services Agreement” has the meaning set forth in Section 8.2(k).

 

“Treasury Regulations” means the regulations (including temporary regulations)
of the United States Treasury Department pertaining to the Code.

 

“TSA Completion Payment” has the meaning set forth in Section 2.2(d). “Union”
has the meaning set forth in Section 3.17.

 

[***]

 

 

ARTICLE 2

PURCHASE AND SALE

 

2.1      Purchase
 and  Sale.     Upon  the  terms  and  subject  to  the  conditions  set  forth  in     this
Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Buyer, free and clear of all Liens, and Buyer shall purchase from
Seller, all of the Acquired Equity.

 

2.2     Purchase Price; Payments by Buyer.

 

(a)         The aggregate consideration for the purchase and sale of the
Acquired Equity at Closing will be an amount in cash equal to the Cash Payment
(such aggregate consideration, the “Purchase Price”).

 

(b)         At least one (1) Business Day prior to the Closing, the Seller shall
prepare and deliver to Buyer a closing statement (the “Closing Statement”),
which shall set forth the Seller’s calculations of (i) the Cash Payment, and
(ii) a schedule of the applicable payment(s) to each Person receiving payments
pursuant to Section 2.2(c) hereof, each based on the estimates and adjustments
set forth in the Net Working Capital Certificate.

 

11

 

(c)        At the Closing, Buyer shall:

 

(i)          on behalf of the Seller, pay to such accounts or account as the
Seller specifies in the Closing Statement the aggregate amount of all
Transaction Expenses as of the Closing; and

 

(ii)         pay to the Seller, an aggregate amount in cash equal to the Cash
Payment by wire transfer of immediately available funds.

 

(d)         Subject to the terms and conditions of the Transition Services
Agreement, in substantially the form of Exhibit B to this Agreement, Buyer shall
also pay Seller the amount of One Million Five Hundred Thousand Dollars
($1,500,000) (the “TSA Completion Payment”), if earned.

 

2.3     Closing. Subject to the terms and conditions of this Agreement, the
consummation of the Transactions (the “Closing”) will occur at the offices of
Morris, Manning & Martin, LLP, 1600 Atlanta Financial Center, 3343 Peachtree
Road, N.E., Atlanta, Georgia 30326 at noon Eastern Time on the first Business
Day of the calendar month (with the Closing effective as of 12:01 a.m. Eastern
Time on the first calendar day of such calendar month) immediately following the
third (3rd) Business Day after the date as of which the conditions to each
Party’s obligations (as set forth in ARTICLE 8) have been satisfied or waived
(if permissible) (other than the conditions with respect to actions the
respective Parties will take at the Closing itself, but subject to the
satisfaction or waiver (if permissible) of such conditions) or at such other
time and on such other date as the Parties mutually agree (the date on which the
Closing occurs, the “Closing Date”). Notwithstanding the foregoing, if the
Closing Date would otherwise occur pursuant to this Section 2.3 during the last
two (2) weeks of any fiscal quarter of McKesson Corporation, the Closing Date
shall be postponed until the first Business Day of the next fiscal quarter of
McKesson Corporation, unless Seller waives such postponement by delivering
written notice to the Buyer.

 

2.4     Purchase Price Adjustment. The Cash Payment shall be adjusted upward or
downward, on a dollar-for-dollar basis, as set forth below:

 

(a)         At least one (1) Business Day prior to the Closing, the Seller shall
deliver to Buyer the Net Working Capital Certificate, which will contain the
Seller’s good faith estimate of (i) the Net Working Capital (calculated in
accordance with the Net Working Capital Schedule as of the Closing Date and
without giving effect to the Transactions) (the “Estimated Net Working
Capital”), (ii) Cash as of immediately prior to Closing and prior to giving
effect to the Transactions (“Estimated Cash”), (iii) Debt of the Company as of
immediately prior to Closing (“Estimated Debt”) and (iv) Transaction Expenses as
of immediately prior to Closing (“Estimated Transaction Expenses”). To the
extent that (y) the Estimated Net Working Capital exceeds the Target Net Working
Capital, the Cash Payment shall be increased by  the amount by which the
Estimated Net Working Capital exceeds the Target Net Working Capital or (z) the
Estimated Net Working Capital is less than the Target Net Working Capital, the
Cash Payment shall be decreased by the amount by which Estimated Net Working
Capital is less than Target Net Working Capital.

 

(b)         Not later than 5:00 p.m., Eastern Time, on the day that is sixty
(60) days after the Closing Date, Buyer shall prepare and deliver to the Seller
a certificate (the “Buyer Certificate”) providing (i) an unaudited balance sheet
as of the Closing Date (prior to giving effect to the Transactions) (the
“Closing Balance Sheet”), (ii) Buyer’s calculations, based on the Closing
Balance Sheet and the Net Working Capital Schedule, of Net Working Capital as of
the Closing Date and prior to giving effect to the Transactions (“Actual Net
Working Capital”), Cash as of immediately prior to Closing and prior to giving
effect to the Transactions (“Actual Cash”), Debt as of immediately prior to the
Closing (“Actual Debt”) and Transaction Expenses as of immediately prior to the
Closing (“Actual Transaction Expenses”), and

12

 

(iii) the amount, if any, by which the Cash Payment, calculated by replacing
Estimated Net Working Capital, Estimated Cash, Estimated Debt and Estimated
Transaction Expenses with, respectively, Actual Net Working Capital, Actual
Cash, Actual Debt and Actual Transaction Expenses, is less than or greater than
the calculation of the Cash Payment at Closing. Buyer’s determination of Actual
Net Working Capital shall be prepared in accordance with the Net Working Capital
Schedule as of the Closing Date and shall utilize the same methodology with
respect to the calculation of the Allowances for Trade Doubtful Accounts as used
to calculate such line item on the Net Working Capital Schedule attached as
Exhibit A hereto. The Buyer Certificate shall include reasonable detail of the
calculation and a  description of the reasons for variations from the Estimated
Net Working Capital, Estimated Cash, Estimated Debt and Estimated Transaction
Expenses, if any. Additionally, during the forty-five (45) day period following
delivery of the Buyer Certificate, Buyer shall promptly provide to the Seller
access to the books and records (including financial records and supporting
documents) of the Company Group and access to employees of Buyer and the Company
Group, in each case, relating to the calculation of Actual Net Working Capital,
Actual Cash, Actual Debt and Actual Transaction Expenses, as the Seller may
reasonably request for the purpose of verifying the Buyer Certificate (the
“Supporting Documentation”).

 

(c)         On or prior to 5:00 p.m., Eastern Time on the day that is forty-five
(45) days following Buyer’s delivery of the Buyer Certificate, the Seller may
give Buyer written notice stating in reasonable detail (to the extent then
known) the Seller’s objections (an “Objection Notice”) to Buyer’s determination
of Actual Net Working Capital, Actual Cash, Actual Debt and Actual
Transaction  Expenses and Buyer’s calculation of the Cash Payment; provided,
that such forty-five (45) day period shall be extended by the amount of any
delay in Buyer’s provision of the Supporting Documentation or access to
employees to the extent required by the last sentence of Section 2.4(b). If the
Seller does not give Buyer an Objection Notice within the aforementioned
forty-five (45) day period (as may be extended pursuant to this Section 2.4(c)),
then the Closing Balance Sheet, Actual Net Working Capital, Actual Cash, Actual
Debt and Actual Transaction Expenses as determined by Buyer in the Buyer
Certificate will be conclusive and binding upon Buyer, and the Seller, and will
constitute the final determination of Actual Net Working Capital, Actual Cash,
Actual Debt and Actual Transaction Expenses for purposes of this Section 2.4.

 

(d)         Following Buyer’s receipt of any Objection Notice (if applicable),
the Seller and Buyer shall attempt to negotiate to resolve such dispute for a
period of thirty (30) days. In the event that the Seller and Buyer fail to agree
on any of the Seller’s proposed adjustments set forth in the Objection Notice
within such thirty (30) day period, the Seller and Buyer agree to engage FTI
Consulting, Inc. to act as the accounting firm hereunder (the “Accounting
Firm”), and shall use their commercially reasonable efforts to cause the
Accounting Firm to make its final determination of Actual Net Working Capital,
Actual Cash, Actual Debt and Actual Transaction Expenses, in accordance with the
terms of this Agreement, within the thirty (30) day period immediately following
such engagement. Buyer and the Seller shall provide the Accounting Firm with
their respective determinations of Actual Net Working Capital, Actual Cash,
Actual Debt and Actual Transaction Expenses, as well as all supporting
documentation reasonably required by the Accounting Firm. The Accounting Firm
shall render a written decision as to each disputed matter set forth in the
Objection Notice, including a statement in reasonable detail of the basis for
its decision. The determination of Actual Net Working Capital, Actual Cash,
Actual Debt and Actual Transaction Expenses by the Accounting Firm shall be
final and binding on Buyer and the Seller. The Accounting Firm shall address
only those items disputed in accordance with this Section 2.4  and the
Accounting Firm may not assign a value greater than the greatest value for any
such item assigned by Buyer, on the one hand, or the Seller, on the other hand,
or less than the smallest value for any such item assigned by Buyer, on the one
hand, or the Seller, on the other hand. The fees and  expenses of the Accounting
Firm shall be allocated between Buyer and Seller so that the Seller shall be
responsible for that portion of the fees and expenses equal to such fees and
expenses multiplied by a fraction, the numerator of which is the aggregate
dollar value of issues in dispute submitted to the

13

 

Accounting Firm that are resolved in a manner further from the position
submitted to the Accounting Firm by the Seller and closer to the position
submitted to the Accounting Firm by Buyer (as finally determined by the
Accounting Firm), and the denominator of which is the total dollar value of the
issues in dispute so submitted, and Buyer shall be responsible for the remainder
of such fees and expenses. In the event the Accounting Firm for any reason fails
or declines to act as the Accounting Firm hereunder, the Seller and Buyer shall
mutually agree to the appointment of a nationally recognized independent
accounting firm to act as the Accounting Firm hereunder.

 

(e)         Following the final determination of the Closing Balance Sheet,
Actual Net Working Capital, Actual Cash, Actual Debt and Actual Transaction
Expenses, the Cash Payment shall be recalculated by replacing Estimated Net
Working Capital, Estimated Cash, Estimated Debt and Estimated Transactions with,
respectively, Actual Net Working Capital, Actual Cash, Actual Debt and Actual
Transaction Expenses, in each case as finally determined in accordance with this
Section 2.4 (the “Final Cash Payment”).

 

(f)         Upon the final determination of the Final Cash Payment:

 

(i)          if the Final Cash Payment is greater than the Cash Payment
calculated at Closing, then Buyer shall pay (or caused to be paid) to the
Seller, an amount equal to such surplus; or

 

(ii)         if the Final Cash Payment is less than the Cash Payment calculated
at Closing, then Seller shall pay (or caused to be paid) to Buyer, an amount
equal to such deficit.

 

(g)         Any payment required to be made under this Section 2.4 shall be made
within ten (10) Business Days of the final determination of the Final Cash
Payment.

 

2.5     Tax Withholding. Buyer shall be entitled to deduct and withhold from the
amounts payable pursuant to this Agreement and the other Transaction Documents
such amounts as Buyer reasonably determines Buyer is required to deduct and
withhold with respect to the making of such payments under any provision of U.S.
federal, state, local or foreign tax Law and instead shall timely pay such
amount to the applicable Governmental Authority. To the extent that amounts are
timely paid to the applicable Governmental Authority, such amounts withheld
shall be treated for all purposes of this Agreement and the other Transaction
Documents as having been paid by Buyer to the recipient in respect of which such
deduction and withholding was made by Buyer. Buyer shall (i) use commercially
reasonable efforts to promptly provide Seller with written notice of any amounts
that Buyer intends to deduct or withhold from any amounts payable pursuant to
this Agreement reasonably in advance of the payment thereof, (ii) cooperate in
good faith with the Seller to seek to eliminate or reduce any such withholding
or deduction, and (iii) provide Seller a reasonable opportunity to provide any
applicable certificates, forms or other documentation that would eliminate or
reduce the requirement to deduct or withhold under applicable Law.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP

 

The Company Group represents and warrants to Buyer that the statements contained
in this ARTICLE 3 are true and correct as of the date hereof, except as set
forth herein or in the disclosure schedule, dated as of the date hereof, and
delivered by the Seller to Buyer contemporaneously with the execution of this
Agreement (the “Seller Disclosure Schedules”).

14

 

3.1     Organization and Qualification; Subsidiaries.

 

(a)         NRE Holding is a corporation, duly formed, validly existing and in
good standing under the Laws of the State of Delaware. PCS is a corporation,
duly formed, validly existing and in good standing under the Laws of the State
of Pennsylvania. Each member of the Company Group (i) has the requisite
corporate or other organizational power and authority necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted and (ii) is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification or
license necessary, except where the failure to be so qualified or licensed or in
good standing would not have a Company Material Adverse Effect.

 

(b)         Other than PCS, NRE Holding owns no Subsidiaries, and PCS owns no
Subsidiaries. Except as set forth herein or on Schedule 3.1(b), no member of the
Company Group owns  or controls, directly or indirectly, Equity Interests in any
Person.

 

3.2     Authorization. Each member of the Company Group has all requisite
corporate power and authority to execute and deliver this Agreement and, subject
to receipt of the Company Approvals, to perform their respective obligations
hereunder and to consummate the Transactions. The execution and delivery of this
Agreement by each member of the Company Group and the consummation by each
Company of the Transactions has been duly authorized by all necessary corporate
action and, except as contemplated by this Agreement, no other corporate
proceedings on the part of any member of the Company Group is necessary to
authorize this Agreement or to consummate the Transactions. This Agreement has
been duly executed and delivered by each member of the Company Group and,
assuming the due authorization, execution and delivery of this Agreement by the
other Parties hereto, constitutes the legal, valid and binding obligation of
each member of the Company Group, enforceable against each member of the Company
Group in accordance with its terms, except as enforcement hereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to or affecting the enforcement of creditors’ rights
generally and legal principles of general applicability governing the
availability of equitable remedies (whether considered in a proceeding in equity
or at Law or under applicable legal codes).

 

3.3     Capitalization.

 

(a)         All of the issued and outstanding Equity Interests of each member of
the Company Group are duly authorized, validly issued and are fully paid and
nonassessable, and none of the issued and outstanding Equity Interests of any
member of the Company Group are subject to or were issued in violation of any
applicable securities Laws, purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of applicable Law, the Governing Documents of the applicable Company
or any Contract to which the Company is a party or by which the Company or its
respective properties or assets are bound. As of the date hereof, all of
the  issued and outstanding Equity Interests of the Company are held of record
and beneficially owned by the Persons set forth on Schedule 3.3(b).

 

(b)         Schedule 3.3(b) sets forth for each member of the Company Group the
classes and amounts of its authorized ownership interests, the amount of its
issued or outstanding Equity Interests, and the record owners of its issued and
outstanding Equity Interests. Except as set forth on Schedule 3.3(b), there are
no Equity Interests of any member of the Company Group issued, reserved for
issuance or outstanding.

15

 

(c)        Except as set forth on Schedule 3.3(c), there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require any
member of the Company Group to issue, sell or otherwise cause to become
outstanding any Equity Interests. Except as set forth on Schedule 3.3(c), there
is no outstanding or authorized equity appreciation, phantom stock, profit
participation or similar rights with respect to any member of the Company Group.

 

3.4     Non-contravention. Neither the execution and delivery of this Agreement,
nor the consummation of the Transactions, will (a) violate any Laws to which any
member of the Company Group is subject, (b) violate any provision of the
Governing Documents of any member of the Company Group, or (c) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify or cancel,
require any notice or consent under (other than notices and consents described
in Schedule 7.1(c)), or result in the imposition of any Lien (other than
Permitted Liens) upon any of the assets of any member of the Company Group under
any Material Contract, except in each case of clauses (a) or (b) where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice or obtain consent or Lien would not have a
Company Material Adverse Effect.

 

3.5     Financial Statements.

 

(a)         Schedule 3.5(a) sets forth copies of: (i) the unaudited consolidated
balance sheet of the Company Group as of March 31, 2019, and the related
unaudited consolidated statements of operations of the Company Group for the
fiscal year then ended (the “Annual Financial Statements”);  and (ii) the
unaudited consolidated balance sheet (the “Interim Balance Sheet”) of the
Company Group as of October 31, 2019 (the “Balance Sheet Date”) and the related
unaudited consolidated statements of operations of the Company Group for the
seven (7) month period then ended (the “Interim Financial Statements” and,
collectively with the Annual Financial Statements, the “Financial Statements”).
The Company Group will cooperate with Buyer to provide access to the financial
information reasonably requested by Buyer and Buyer’s auditors for the
preparation of audited Annual Financial Statements of the Company Group.

 

(b)         The Financial Statements: (i) fairly present, in all material
respects, the financial position of the Company Group and the consolidated
results of operations of the Company Group as of the respective dates thereof
and for the periods covered thereby; and (ii) except as set forth in Schedule
3.5(b), were prepared in accordance with books, records and accounting
principles and practices of the Company Group and based on the Company Group’s
materiality thresholds, provided that the Financial Statements (W) only include
financial information for the periods indicated therein, (X) do not include
footnote disclosures and other presentation items, (Y) were not prepared on a
stand-alone basis and do not reflect all stand-alone costs of doing business or
all corporate overhead expenses and (Z) are subject to normal year-end
adjustments.

 

3.6     Absence of Undisclosed Liabilities. Except as set forth on Schedule 3.6,
the Company Group has no material liabilities in excess of $100,000.00, except
for liabilities (i) reflected or reserved against in the Financial Statements,
(ii) liabilities incurred in the ordinary course of business since the Balance
Sheet Date, (iii) liabilities to perform in accordance with their terms, any
Contract to which any member of the Company Group is a party other than
liabilities arising from any material breach of any such Contract, (iv)
liabilities in respect of Transaction Expenses or incurred in connection with
the transactions contemplated by this Agreement, (v) liabilities disclosed or
referred to in the Seller Disclosure Schedules; and (vi) liabilities that,
individually or in the aggregate, would not have, or would not reasonably be
expected to have, a Company Material Adverse Effect.

16

 

3.7     Subsequent Events; No Material Adverse Effect.

 

(a)         Except for this Agreement and as set forth in Schedule 3.7, since
the Balance Sheet Date, there has not been:

 

(i)          any Company Material Adverse Effect;

 

(ii)         any material amendment to the Governing Documents of any member
of the Company Group;

 

(iii)       material change in any method of accounting or accounting practice
of the Company, except as required by GAAP or applicable Law or disclosed in the
notes to the Financial Statements;

 

(iv)        adoption of any plan of merger, consolidation, reorganization,
liquidation or dissolution or filing of a petition in bankruptcy under any
provisions of federal or state bankruptcy Law or consent to the filing of any
bankruptcy petition against it under any similar Law; or

 

(v)         any agreement to do any of the foregoing, or any action or omission
that would result in any of the foregoing.

 

3.8     Legal Compliance. Except as set forth on Part I of Schedule 3.8, as of
the date of this Agreement, (a) each member of the Company Group holds all
material permits, licenses, approvals, certificates and other authorizations,
including Medicare and Medicaid provider numbers, of and from all applicable
Governmental Authorities necessary for the lawful conduct of the Business (the
“Material Permits”); and (b) the Business is being operated in material
compliance with all applicable Laws, provided,  however, that with respect to
the Company Group’s compliance with Health Care Laws or Privacy Laws, the
representations in Section 3.8(b) shall not apply. The Company Group’s
compliance with Health Care Laws or Privacy Laws are covered exclusively by the
representations in Sections 3.22 (Healthcare Compliance) and 3.23  (HIPAA)
below. Part II of Schedule 3.8 includes a list of the Material Permits held or
applied for by any member of the Company Group.

 

3.9     Tax Matters. Except as set forth on Schedule 3.9:

 

(a)         Each member of the Company Group has timely filed all material Tax
Returns required to be filed by it (taking into account applicable extensions),
and each such Tax Return is true, correct and complete in all material respects
and has been prepared in material compliance with all applicable Laws. All Taxes
(whether or not shown as due thereon) of each member of the Company Group have
been timely paid by such member of the Company Group or adequate provision
therefor has been made in the Financial Statements.

 

(b)         All material Taxes required to be deducted or withheld by any member
of the Company Group have been deducted and withheld and, to the extent
required, have been timely paid to the proper Tax Authority.

 

(c)         No member of the Company Group (i) is party to or bound by any Tax
allocation, sharing or indemnity contract (other than any such contract the
principal purpose of which is not Taxes) or (ii) has any outstanding contracts,
consents or waivers extending the statutory period of limitations applicable to
the collection or assessment of any Taxes.

17

 

(d)        No member of the Company Group is subject to any claims, deficiencies
or assessments of Taxes asserted or threatened in writing by any Tax Authority
that remain unpaid or otherwise unresolved.

 

(e)         Except for Permitted Liens, there are no Tax liens upon any property
or assets of any member of the Company Group.

 

(f)         No member of the Company Group has participated in any “listed
transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

Notwithstanding anything to the contrary in this Agreement, no member of the
Company Group nor Seller makes any representation or warranty as to the amount,
limitation on, existence or availability in any Tax period (or portion thereof)
beginning after the Closing Date of any net operating loss, net operating loss
carryforward, capital loss, capital loss carryforward, Tax credit, Tax credit
carryforward or other Tax attribute of any member of the Company Group from a
Tax period (or portion thereof) ending on or before the Closing Date.

 

3.10   Real Property.

 

(a)         No member of the Company Group owns any real property.

 

(b)         Schedule 3.10(b) sets forth the landlord, tenant and address of any
real property leased by a member of the Company Group, and a list of the leases
and security deposit amounts paid pursuant to such leases, if any, in respect of
such leased real property (the “Real Property Leases”). The Company Group has
made available to Buyer a copy of each such Real Property Lease.

 

(c)         Except as set forth on Schedule 3.10(c), (i) each Real Property
Lease is the valid and binding obligation of the applicable member of the
Company Group, enforceable in accordance with its terms subject to proper
authorization and execution of such Real Property Lease by the other party
thereto and the Laws of general application relating to public policy,
bankruptcy, insolvency and the relief of debtors and rules of Law governing
specific performance, injunctive relief and other equitable remedies; and (ii)
neither the applicable member of the Company Group nor, to the Seller’s
Knowledge, any other party to such Real Property Lease is in material default
under, or in material breach or violation of, such Real Property Lease.

 

3.11   Personal Property. Except as disposed of in the ordinary course of
business or as set forth on Schedule 3.11, the Company Group has good and
marketable title to, or a valid leasehold interest in, all material items of
tangible personal property reflected on the Financial Statements as owned or
leased by the Company Group, free and clear of any Liens (other than Permitted
Liens).

 

3.12   Intellectual Property.

 

(a)         Schedule 3.12 sets forth a list of all (i) Intellectual Property
that is registered with a Governmental Authority, owned by the Company Group,
and material to the operation of the Business as of the date hereof (“Scheduled
Intellectual Property”) and (ii) written license agreements that are material to
the operation of the Business as of the date hereof with respect to any software
that is licensed by or to any member of the Company Group (other than “off the
shelf” licenses pursuant to which such Intellectual Property is made available
free of charge or through regular commercial distribution channels on standard
terms and conditions). To the Seller’s Knowledge, as of the Closing Date, the
Company Group owns, licenses or otherwise possesses rights to use, each item of
Scheduled Intellectual Property; provided, that the foregoing sentence shall not
be interpreted or construed as a representation or warranty

18

 

relating to infringement, misappropriation, dilution or other violation of any
third party Intellectual Property.

 

(b)         Except as would not be material to the Company Group, taken as a
whole, (i) to the Seller’s Knowledge, no member of the Company Group has
infringed or misappropriated, or is now infringing or misappropriating, the
Intellectual Property rights of any third party; (ii) there is no claim pending
or, to the Seller’s Knowledge, claim threatened in writing against any member of
the Company Group with respect to the alleged infringement or misappropriation
by such member of the Company Group of any Intellectual Property rights of any
third party; and (iii) there is no currently pending claim by any member of the
Company Group against a third party with respect to the alleged infringement or
misappropriation of the Scheduled Intellectual Property.

 

(c)         All Scheduled Intellectual Property used in the Business as of the
date hereof is free and clear of all Liens (other than Permitted Liens).

 

(d)         Except as would not have a Company Material Adverse Effect, each
member of the Company Group has taken commercially reasonable steps to protect
its rights in the material trade secrets of the Business as of the date hereof,
excluding any information that such member of the Company Group, in the exercise
of its business judgment, determined was of insufficient value to protect as a
trade secret.

 

3.13   Contracts.

 

(a)         Except as listed or described on Schedule 3.13, as of the date
hereof, no member of the Company Group is bound by any Contracts that are of a
type described below (such Contracts listed on Schedule 3.13 of the Seller
Disclosure Schedules are referred to herein as the “Material Contracts”):

 

(i)          any Contract pursuant to which a member of the Company Group is
required to make aggregate payments in excess of Seventy-Five Thousand Dollars
($75,000.00) in any fiscal year (not taking into account any renewals or
extensions of the term thereof, automatic or otherwise);

 

(ii)         any employment agreement that provides for annual base salary
exceeding One Hundred Thousand Dollars ($100,000.00) per year and which cannot
be terminated by a member of the Company Group without material severance or
other material penalty and without notice of thirty (30) days or more;

 

(iii)       any collective bargaining agreement with any Union;

 

(iv)        any Contract for capital expenditures or the acquisition or
construction of fixed assets in excess of Two Hundred Fifty Thousand Dollars
($250,000.00);

 

(v)         any Contract relating to the borrowing of money, or the guaranty of
another Person’s borrowing of money or other obligation, including all notes,
mortgages, indentures and other obligations, guarantees of performance,
agreements and instruments for or relating to any lending or borrowing (other
than advances to employees for expenses in the ordinary course of business or
transactions with customers on credit in the ordinary course of business);

19

 

(vi)       any Contract granting any Person a material Lien on all or any part
of the material assets of a member of the Company Group, other than Liens which
will be released at or prior to the Closing and Permitted Liens;

 

(vii)       any Contract under which a member of the Company Group has granted
or received a material license or sublicense or under which it is obligated to
pay or has the right to receive an annual royalty, license fee or similar
payment in an amount in excess of Seventy-Five Thousand Dollars ($75,000.00),
other than Contracts with the customers of the Company Group or licenses for
software available through regular commercial distribution channels on standard
terms and conditions and reseller agreements entered into in the ordinary course
of business;

 

(viii)     any Contract involving the operation of any joint venture or
partnership entity;

 

(ix)        any Contract granting any Person “most favored nation”, “most
favored customer”, or similar price or term protections or other rights
obligating the Company to change the conditions of such Contract based on better
terms or conditions provided to other Persons; or

 

(x)         any Contract containing a covenant of a member of the Company Group
not to compete in any line of business or with any Person in any geographical
area.

 

For the avoidance of doubt, Material Contracts shall not include any Contracts
to which Seller or any Affiliate of Seller, other than a member of the Company
Group, is party or is otherwise bound.

 

(b)         The Company Group has made available to Buyer a copy of or otherwise
disclosed each written Material Contract. Each Material Contract is a valid and
binding obligation of the applicable member of the Company Group that is a party
to such Material Contract, enforceable in accordance with its terms and
conditions, subject to Laws of general application relating to public policy,
bankruptcy, insolvency and the relief of debtors and rules of Law governing
specific performance, injunctive relief and other equitable remedies.  Neither
the applicable member of the Company Group  nor, to the Knowledge of the Seller,
any other party to such Material Contract is in material breach or material
default of any material term under such Material Contract, and to the Knowledge
of the Seller,  no event has occurred which, with the passage of time or the
giving of notice or both, would constitute a default or breach of any material
term under any Material Contract, in each case, except for such breaches and
defaults that would not have a Company Material Adverse Effect.

 

3.14   Litigation. Except as set forth on Schedule 3.14, or as would not be
material to the Company Group, taken as a whole, as of the date of this
Agreement: (a) there are no Legal Proceedings pending or, to the Seller’s
Knowledge, threatened in writing against any member of the Company Group; and
(b) no member of the Company Group is subject to any judgment, order or decree
of any Governmental Authority.

 

3.15   Employee Benefits.

 

(a)         Schedule 3.15(a) lists each Employee Plan currently maintained,
sponsored or contributed to by any member of the Company Group for which any
such member has any material liability (each, a “Company Plan”).

 

(b)         Each Company Plan has been maintained, funded and administered  in
accordance with the terms of such Company Plan and the material requirements of
applicable Law, including ERISA and the Code, except as would not have a Company
Material Adverse Effect.

20

 

(c)        Each Company Plan that is intended to meet the requirements of a
“qualified plan” under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service or is in the form of a
prototype or volume submitter document that is the subject of a favorable
opinion letter from the Internal Revenue Service.

 

(d)         Except as set forth on Schedule 3.15(d), no Company Plan is subject
to Title IV of ERISA or Code § 412 or is a Multiemployer Plan or provides for
post-employment health benefits other than as required by Law.

 

(e)         The Company has made available to Buyer copies of the following, as
applicable, with respect to the Company Plans: current plan documents and the
most recent summary plan description provided to participants, the most recent
determination opinion letter received from the Internal Revenue Service, and the
most recent annual report (Form 5500).

 

(f)         As of the date of this Agreement, all contributions (including all
employer contributions and employee salary reduction contributions) required to
have been made under any of the Company Plans to any funds or trusts established
thereunder or in connection therewith have been made by the due date thereof
(including any valid extension), except as would not have a Company Material
Adverse Effect.

 

(g)         No material actions, claims (other than routine benefit claims) or
lawsuits have been asserted or instituted against any Company Plan or related
trust, sponsor, administrator or fiduciary during the applicable ownership
period, nor to the Seller’s Knowledge are there facts that could reasonably be
expected to form the basis for any such action, claim or lawsuit.

 

(h)         Except as set forth on Schedule 3.15(h), with respect to any member
of the Company Group, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, either alone or in
connection with any other event, will (i) accelerate the timing of vesting,
funding or payment, or increase the amount or value, of any compensation or
benefits to any current or former employee of any member of the Company Group or
(ii) give rise to payments or benefits that would be nondeductible to the payor
under Section 280G of the Code or that would result in an excise Tax on any
recipient under Section 4999 of the Code.

 

3.16   Environmental Matters. Each member of the Company Group is complying, in
all material respects, with all applicable Environmental Laws. No member of the
Company Group has received any written notice regarding any actual or alleged
unresolved violation of Environmental Law, or any unresolved liability arising
under Environmental Laws, in each case relating to the Business as of the date
hereof, the subject matter of which would have a Company Material Adverse
Effect.

 

3.17   Labor Matters. No member of the Company Group is party to or bound by any
collective bargaining agreement or other Contract with a union, works council or
labor organization (collectively, “Union”). As of the date of this Agreement,
there are no pending or, to the Seller’s Knowledge, threatened, material
arbitrations, material grievances, labor disputes, strikes, picketing
activities, boycotts, work stoppages or slowdowns against or affecting any
member of the Company Group. Each member of the Company Group is in compliance,
in all material respects, with all applicable Laws governing the employment of
labor.

 

3.18   Insurance Policies. No member of the Company Group has received any
written notice of pending cancellation of, material premium increase with
respect to, or material alteration of coverage under, any insurance policy
maintained by or for the Company Group. Each insurance policy maintained by or
for the Company Group is fully paid or current with regard to payment.

21

 

3.19   Affiliated Transactions. Except as set forth on Schedule 3.19, or for
employment and equity agreements and arrangements entered into with any member
of the Company Group, no officer, director or Affiliate of any member of the
Company Group is a party to any Material Contract or material transaction with
any member of the Company Group.

 

3.20   Material Customers and Material Suppliers.

 

(a)         Schedule 3.20(a) sets forth the ten (10) largest customers (measured
by revenue) of the Company Group, taken as a whole, for each of the fiscal year
ended March 31, 2019 (the “Material Customers”).

 

(b)         Schedule 3.20(b) sets forth the ten (10) largest suppliers, vendors,
manufacturers or licensors (measured by dollar amounts paid by the Company Group
in the fiscal year) of the Company Group, taken as a whole, as of the fiscal
year ended March 31, 2019 (the “Material Suppliers”).

 

(c)         Except as set forth on Schedule 3.20(c), since January 1, 2018, no
Material Customer or Material Supplier, has canceled, terminated, or materially
modified its Contracts with a member of the Company Group, or has proposed or
provided written notice to do the same to a member of the Company Group.

 

3.21   Brokers’ Fees.  Other than to Broker, no member of the Company Group has
any liability  to pay any fees, costs or commissions to any broker, finder or
similar agent with respect to the transactions contemplated by this Agreement.

 

3.22   Healthcare Compliance.

 

(a)         Schedule 3.22(a) sets forth any matters contrary to the following
representation (other than routine, ordinary course billing reviews which would
not reasonably be expected to result in refunds or Damages in excess of Fifty
Thousand Dollars ($50,000.00) for all claims related to the action, demand,
requirement or investigation): Since January 1, 2014 (i) the operations of each
member of the Company Group, have been in material compliance with all Health
Care Laws applicable to such members, their products and their properties or
other assets, and each member of the Company Group has maintained all material
records required to be maintained by such Health Care Laws; (ii) no member of
the Company Group has received any written communication regarding any actual or
suspected violation of any Health Care Laws by any member of the Company Group;
and (iii) no action, demand, requirement or investigation by any Governmental
Authority under any requirement arising under any Health Care Law has occurred
during the last five (5) years, is pending or, to the Seller’s Knowledge, is
threatened.

 

(b)         Schedule 3.22 (b) sets forth any matters contrary to the following
representation (except with respect to processing errors which would not
reasonably be expected to result in refunds or Damages in excess of Fifty
Thousand Dollars ($50,000) for all errors related to such report, document,
claim, notice or approval): Since January 1, 2014, all material reports,
documents, claims, notices or approvals required to be filed, obtained,
maintained or furnished to any Governmental Authority by any member of the
Company Group have been so filed, obtained, maintained or furnished, and all
such reports, documents, claims and notices were complete and correct in all
material respects on the date filed (or were corrected in or supplemented by a
subsequent filing).

 

(c)     Schedule 3.22(c) sets forth any matters contrary to the following
representation (other than routine ordinary course billing reviews or mistakes
which would not reasonably be expected to result in refunds or Damages in excess
of Fifty Thousand Dollars ($50,000) for all claims related to a

22

 

third party payor): Each member of the Company Group and each of their physical
locations and sites have the requisite provider numbers and are in material
compliance with all Laws and contractual obligations required to bill the
Medicare program (to the extent any such entity participates in the Medicare
program and such location requires enrollment), the respective Medicaid program
in the state or states in which such entity operates, and all other third party
payors that any member of the Company Group currently bills. Schedule 3.22(c)
sets forth any matters contrary to the following representation (other than
routine, ordinary course billing reviews which would not reasonably be expected
to result in refunds or Damages in excess of Fifty Thousand Dollars ($50,000.00)
for all claims related to a third party payor): there is no investigation,
audit, claim review, or other action pending, or to the Knowledge of the Seller,
threatened, relating to any offense of a third party payor program or which
could result in a revocation, suspension, termination, probation, restriction,
limitation, or non-renewal of any provider number or result in the exclusion of
any member of the Company Group from participation in any third party payor
program. Schedule 3.22(c) sets forth any matters contrary to the following
representation (other than routine ordinary course billing reviews or mistakes
which would not reasonably be expected to result in refunds or Damages in excess
of Fifty Thousand Dollars ($50,000) for all claims related to a third party
payor): no member of the Company Group has billed or received any payment or
reimbursement in excess of amounts allowed by any Health Care Law or other Law
or payor requirement.

 

(d)         The Parties agree that the Fifty Thousand Dollar ($50,000.00)
thresholds excluded from disclosure on the above-referenced in Schedules 3.22
(a),  (b) and (c) relate only to the substance of items scheduled and shall not
qualify the representation made and shall be disregarded for purposes of
determining whether a breach of the representation has occurred or for
calculating Damages for any breach of such representations pursuant to ARTICLE
9.

 

(e)         Except as set forth on Schedule 3.22(e), no member of the Company
Group is a party to any Contract with any Referral Source, to provide services,
lease space, lease equipment or engage in any other venture or activity, other
than agreements which are in compliance with all applicable Health Care Laws. No
member of the Company Group, directly or indirectly has: (i) offered or paid any
remuneration, in cash or in kind, to, or made any financial agreements with, any
past, present or potential patient, supplier, medical staff member, contractor,
third party payor, or Referral Source of the Company Group in order to illegally
obtain business or payments from such Person; (ii) given or agreed to give, or
has any knowledge that there has been made or that there is any illegal
agreement to make, any illegal gift or gratuitous payment of any kind, nature or
description (whether in money, property or services) to any past, present or
currently identified potential patient, supplier, contractor, third party payor,
Referral Source, or any other Person; (iii) established or maintained any
unrecorded fund or asset for any purpose or made any misleading, false or
artificial entries on any of its books or records for any reason; or (iv) made,
or agreed to make, or has any knowledge that there has been made or that there
is any agreement to make, any payment to any Person with the intention or
understanding that any part of such payment would be used or was given for any
purpose other than that described in the documents supporting such payment.

 

(f)         There are no Medicare, Medicaid, or other third party payor
termination proceedings underway with respect to any member of the Company
Group.

 

(g)         The members of the Company Group have established and implemented a
corporate compliance plan, including policies and procedures and a code of
ethics, to promote compliance and detect non-compliance of the Company Group and
their respective directors, officers and employees with all applicable Health
Care Laws.

23

 

(h)        The compensation paid or to be paid by any member of the Company
Group to any Referral Source is fair market value for the services and items
actually provided by such Person, not taking into account the value or volume of
referrals or other business generated by such Person for the members of the
Company Group.

 

(i)          No member of the Company Group or any of the officers, directors,
or  employees of the members of the Company Group: (i) has been charged with or
convicted of any  criminal offense relating to the delivery of an item or
service or the submission of a claim for reimbursement under any Government
Health Care Program; (ii) has been debarred, excluded or suspended from
participation in any Government Health Care Program; (iii) has had a civil
monetary penalty assessed against it, him or her under Section 1128A of the
Social Security Act; (iv) is currently listed on the General Services
Administration or Office of Inspector General published list of parties excluded
from federal procurement programs and non-procurement programs; or (v) is a
party to, or bound by, an individual integrity agreement, corporate integrity
agreement, deferred prosecution agreement, or other formal or informal agreement
with any Governmental Authority concerning compliance with Health Care Laws.

 

3.23   HIPAA. Since January 1, 2014, each member of the Company Group has used
and disclosed Protected Health Information (as defined in 45 C.F.R. § 160.103)
to perform functions, activities or services only in accordance with the
limitations set forth in the Privacy Laws, and, to the extent applicable, in
accordance with limitations set forth in third party agreements to which any
member of the Company Group is a party. No member of the Company Group has
received any written notice, communication, or information from any Governmental
Authority or any other Person regarding, any actual, alleged, possible, or
potential violation of, or failure of any member of the Company Group to comply
with, the Privacy Laws.

 

3.24    Fraud. There has been no Fraud that would reasonably be expected to
materially and adversely affect the Company Group.

 

3.25   No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS ARTICLE 3, AS QUALIFIED BY THE SCHEDULES AND
SELLER DISCLOSURE SCHEDULES, NO MEMBER OF THE COMPANY GROUP MAKES ANY EXPRESS OR
IMPLIED REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND EACH MEMBER OF THE COMPANY GROUP HEREBY DISCLAIMS ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE, EXPRESS OR IMPLIED,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ANY OF ITS DIRECTORS,
MANAGERS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL
DATA). WITHOUT LIMITING THE FOREGOING, BUYER SHALL ACQUIRE THE BUSINESS AND THE
COMPANY GROUP WITHOUT ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS”
BASIS, EXCEPT AS OTHERWISE EXPRESSLY REPRESENTED OR WARRANTED IN THIS ARTICLE 3
OR ARTICLE 4, AS QUALIFIED BY THE SCHEDULES AND SELLER DISCLOSURE SCHEDULES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, NO MEMBER OF THE COMPANY GROUP SHALL
BE DEEMED TO MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO (A) ANY
PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO
BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS OF FUTURE
REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF OPERATIONS OF ANY MEMBER
OF THE COMPANY GROUP OR ANY OTHER PERSON OR (B) EXCEPT AS EXPRESSLY COVERED BY A
SPECIFIC

24

 

REPRESENTATION AND WARRANTY CONTAINED IN THIS ARTICLE 3 OR ARTICLE 4, ANY OTHER
INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE AVAILABLE TO BUYER OR ANY
OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS WITH RESPECT TO ANY MEMBER
OF THE COMPANY GROUP, SELLER OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

As an inducement to Buyer to enter into this Agreement, Seller represents and
warrants to Buyer

that:

 

4.1     Authorization. Seller has all requisite power and authority to execute
and deliver this Agreement, and to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Seller and the consummation by Seller of the Transactions have been duly
authorized by all necessary action, and no other proceedings on the part of
Seller is necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly executed  and delivered by Seller
and, assuming the due authorization, execution and delivery hereof by the other
Parties hereto, constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as enforcement
hereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to or affecting the
enforcement of creditors’ rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).

 

4.2     No Conflict; Required Filings and Consents. The execution and delivery
of this Agreement by Seller does not, and the consummation of the Transactions
will not (a) conflict with or violate the certificate of incorporation and
bylaws or other equivalent organizational documents, in each case as amended or
restated to date, of Seller, (b) conflict with or violate any Laws applicable to
Seller or by which its assets or property is bound or subject, (c) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, acceleration or cancellation of, or require payment under any of
the properties or assets of Seller pursuant to, any note, bond, mortgage,
indenture, Contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Seller is a party or by which Seller or its
assets or property is bound or subject or (d) require Seller to obtain any
consent, license, permit, approval, waiver, authorization or order of, or to
make any filing with or notification to, any Governmental Authority or third
Person, except for compliance with and filings, notices, permits,
authorizations, consents and approvals that may be required under any
Competition Laws.

 

4.3     Title. Seller is the record and beneficial owner of all the Acquired
Equity, and Seller has good and marketable title to the Acquired Equity, free
and clear of all Liens. Seller has full right, power and authority to transfer
and deliver to Buyer valid title to the Acquired Equity, free and clear of all
Liens.

 

4.4     No Brokers. Other than the Broker, no broker, finder or investment
banker is entitled to  any brokerage, finder’s or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
Seller.

 

4.5     No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS ARTICLE 4, AS QUALIFIED BY THE SCHEDULES AND
SELLER DISCLOSURE SCHEDULES, SELLER MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS
OR WARRANTIES IN CONNECTION WITH THE TRANSACTIONS

25

 

CONTEMPLATED HEREBY, AND SELLER HEREBY DISCLAIMS ANY OTHER REPRESENTATION OR
WARRANTY OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, NOTWITHSTANDING THE DELIVERY
OR DISCLOSURE TO BUYER OR ANY OF ITS DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES,
AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING
ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). WITHOUT LIMITING THE
FOREGOING, BUYER SHALL ACQUIRE THE BUSINESS AND THE COMPANY GROUP WITHOUT ANY
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS, EXCEPT AS OTHERWISE
EXPRESSLY REPRESENTED OR WARRANTED IN ARTICLE 3 OR THIS ARTICLE 4, AS QUALIFIED
BY THE SCHEDULES AND SELLER DISCLOSURE SCHEDULES. NOTWITHSTANDING ANYTHING TO
THE CONTRARY, SELLER SHALL NOT BE DEEMED TO MAKE ANY REPRESENTATION OR WARRANTY
WITH RESPECT TO (A) ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED
TO OR MADE AVAILABLE TO BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR
ADVISORS OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF
OPERATIONS OF ANY MEMBER OF THE COMPANY GROUP OR ANY OTHER PERSON OR (B) EXCEPT
AS EXPRESSLY COVERED BY A SPECIFIC REPRESENTATION AND WARRANTY CONTAINED IN THIS
ARTICLE 4, ANY OTHER INFORMATION OR DOCUMENTS (FINANCIAL OR OTHERWISE) MADE
AVAILABLE TO BUYER OR ANY OF ITS AFFILIATES, COUNSEL, ACCOUNTANTS OR ADVISORS
WITH RESPECT TO ANY MEMBER OF THE COMPANY GROUP, SELLER OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

 

As an inducement to each member of the Company Group and the Seller to enter
into this Agreement, Buyer represents and warrants to Seller and the members of
the Company Group that:

 

5.1     Organization and Qualification. Buyer (a) is a legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization, (b) has the requisite corporate or other
organizational power and authority necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted and (c) is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification or license
necessary.

 

5.2     Authorization. Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and each other agreement contemplated hereby
to which it is a party, and to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Buyer and the consummation by Buyer of the Transactions has been duly authorized
by all necessary corporate action and, except as contemplated by this Agreement,
no other corporate proceedings on the part of Buyer are necessary to authorize
this Agreement or to consummate the Transactions. This Agreement has been duly
executed and delivered by Buyer and, assuming the due authorization, execution
and delivery hereof by the Seller and the Company Group, constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws relating to or affecting the enforcement of creditors’ rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity or at Law or
under applicable legal codes).

26

 

5.3     Non-contravention.

 

(a)         Neither the execution and delivery of this Agreement, nor the
consummation of the Transactions, will (i) violate any Laws to which Buyer is
subject, (ii) violate any provision of Buyer’s Governing Documents, or (iii)
conflict with, result in a breach of, constitute a material default under,
result in the acceleration of, create in any Person the right to accelerate,
terminate, modify or cancel or require any notice or consent under, or result in
the imposition of any Lien (other than Permitted Liens) upon any of the assets
of Buyer, any agreement, contract, lease, license, instrument or other
arrangement to which Buyer is a party or by which Buyer is bound or to which any
of its assets is subject, except in each case of clause (i) or (iii) where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice or obtain consent or Lien would not
adversely affect or delay Buyer’s performance under this Agreement or the
consummation of the Transactions.

 

(b)         Buyer is not required to give any notice to, make any filing with or
obtain any authorization, consent or approval of any Governmental Authority in
order to consummate the Transactions.

 

(c)         Buyer is in compliance with and, to the knowledge of Buyer, is not
under investigation with respect to, and has not been threatened to be charged
with or given notice of any material violation of, any applicable Law. Buyer is
in material compliance with any applicable permits, licenses or other similar
approvals issued by any Governmental Authority, except as would not reasonably
be expected to have a material adverse effect on Buyer.

 

5.4     Brokers’ Fees. Buyer does not have any liability to pay, or to reimburse
any other Person for payments of, any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this Agreement.

 

5.5     Litigation. There are no Legal Proceedings pending or threatened against
Buyer that would adversely affect or delay Buyer’s performance under this
Agreement or the consummation of the Transactions.

 

5.6     Sufficient Funds. Buyer has the financial capability, and as of the time
any payment is required to be made by Buyer hereunder, will have sufficient cash
on hand necessary to consummate the transactions contemplated by this Agreement
on the terms and subject to the conditions set forth herein, including the
payment of the amounts due and payable by Buyer hereunder. The obligations of
Buyer under this Agreement are not subject to any conditions regarding Buyer’s,
it’s respective Affiliates’, or any other Person’s ability to obtain financing
for the consummation of the transactions contemplated by this Agreement.

 

5.7     Solvency. Immediately following the Closing and after giving effect to
the Transactions, Buyer will be Solvent, assuming the accuracy of the Company
Group’s representations in ARTICLE 3. For purposes of this Agreement, “Solvent”
when used with respect to Buyer means that, as of any date of determination, (a)
the Present Fair Salable Value of its assets will, as of such date, exceed its
probable liabilities on existing debts as they become absolute and matured
(including, in any event, payments that may become due under the debt
instruments as a result of the Transactions), (b) Buyer will not have, as of
such date, an unreasonably small amount of assets or capital for the business in
which it is engaged or will be engaged and (c) Buyer will be able to pay its
debts as they become absolute and matured, in the ordinary course of business.
For purposes of the definition of “Solvent” (y) “debt” means liability on a
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, and (z) “Present Fair
Salable Value” means the amount that may be realized if the aggregate assets of
the Buyer

27

 

(including goodwill) are sold as an entirety with reasonable promptness in an
arm’s length transaction under present conditions for the sale of comparable
business enterprises.

 

5.8     Condition of Business. Notwithstanding anything contained in this
Agreement to the contrary, Buyer acknowledges and agrees that no member of the
Company Group, the Seller nor any other Person is making any representations or
warranties whatsoever, express or implied, at law or in equity, beyond those
expressly given in ARTICLE 3 and ARTICLE 4, and Buyer is not relying on any
other representations or warranties not expressly made in ARTICLE 3 and/or
ARTICLE 4. Buyer acknowledges and agrees that, except for the express
representations and warranties contained in ARTICLE 3 and ARTICLE 4, the
Business and each member of the Company Group are being transferred on a “where
is” and, as to condition, “as is” basis.

 

ARTICLE 6

CONDUCT PRIOR TO THE CLOSING

 

6.1     Conduct of Business.

 

(a)         From the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to its terms, and except as otherwise
consented to in writing by Buyer (which consent shall not be unreasonably
withheld, conditioned or delayed), Seller shall cause the Company Group to
continue to conduct its business in the ordinary course and, to the extent
consistent therewith, shall use commercially reasonable efforts to carry on and
preserve intact its current business organization, keep available the services
of its current officers and employees, and preserve its relationships with
customers, licensors, licensees and others with whom the Company Group has
contractual or other commercial relations in substantially the same manner as
such relationships existed immediately prior to the date of this Agreement.

 

(b)         From the date hereof until to the earlier of the Closing or the
termination of this Agreement pursuant to its terms, except as expressly
permitted or required by this Agreement or as otherwise consented to by the
Buyer in writing (which consent shall not be unreasonably withheld, conditioned
or delayed), no member of the Company Group shall:

 

(i)          other than in the ordinary course of business, (A) enter into any
Contract which would have constituted a Material Contract had such Contract been
entered into prior to the date of this Agreement, or (B) materially and
adversely amend any Material Contract;

 

(ii)         split, combine or reclassify any Equity Interests of such Company,
or issue any other securities in respect of, in lieu of or in substitution for
any Equity Interests of such Company;

 

(iii)       issue, grant, deliver or sell, or purchase, redeem or otherwise
acquire, any Equity Interests or any securities convertible into such equity
securities or options to acquire any such convertible securities;

 

(iv)        amend or otherwise modify the Governing Documents of any member
of the Company Group;

 

(v)         acquire any Person or other business enterprise or division thereof
(whether by merger, consolidation, sale of stock, sale of assets or otherwise);

28

 

(vi)       sell, lease, convey or otherwise dispose of any assets of any member
of the Company Group that are material to such Company, other than the sale or
license of products in the ordinary course of business;

 

(vii)       incur any Debt over Two Hundred Fifty Thousand Dollars ($250,000.00)
or any Debt other than in ordinary course of business consistent with past
practice;

 

(viii)     grant any loans to others or purchase debt securities of others;

 

(ix)        except as required by GAAP or in the ordinary course of business,
revalue any of its material assets (whether tangible or intangible);

 

(x)         other than in the ordinary course of business or as required by Law,
make or change any material election in respect of Taxes, adopt or change any
material accounting method in respect of Taxes, enter into any material closing
agreement, settle any material claim or assessment in respect of Taxes with any
Tax Authority or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes with any Tax
Authority; or

 

(xi)        agree in writing to take any of the actions described in this
Section 6.1(b).

 

(c)         The Buyer acknowledges and agrees that (i) nothing contained in this
Agreement shall give the Buyer, directly or indirectly, the right to control or
direct the operations of any member of the Company Group prior to Closing, and
(ii) during the period prior to Closing, each member of the Company Group shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.

 

6.2     Access and Information. From the date hereof through the Closing Date or
the earlier termination of this Agreement pursuant to its terms, the Company
Group shall, and the Seller shall cause each member of the Company Group to, (a)
afford to Buyer and Buyer’s officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
“Buyer Representatives”) reasonable access during normal business hours upon
reasonable prior notice, to the directors, officers, employees, agents,
properties, offices, facilities, books and records of each member of the Company
Group and (b) furnish promptly to Buyer and the Buyer Representatives such
information concerning the business, properties, Contracts, records and
personnel (including financial, operating and other data and information) of the
members of the Company Group as is prepared or compiled by such Company in the
ordinary course of business and as may be reasonably requested from time to time
by Buyer. Buyer shall treat all information obtained from the Company as
“Evaluation Material” (as such term is defined in the Confidentiality Agreement)
and Buyer shall continue to honor, and cause the Buyer Representatives to honor,
its obligations under the Confidentiality Agreement. Notwithstanding the
foregoing, neither the Seller nor any member of the Company Group shall be
required to provide access to or to disclose information where such access or
disclosure would jeopardize the attorney-client privilege of the Seller or a
member or the Company Group, or would violate any Law applicable to the Seller
or a member of the Company Group or the confidentiality provisions of any
Contract to which the Seller or a member of the Company Group is a party or
otherwise bound or where, in the good faith judgment of Seller or any member of
the Company Group, such access or disclosure would be prohibited by Law.

29

 

ARTICLE 7

ADDITIONAL AGREEMENTS

 

 

7.1     Appropriate Actions; Consents; Filings.

 

(a)         The Seller, Company Group and Buyer will each cooperate with each
other and use commercially reasonable efforts (i) to take, or to cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under the Agreement, applicable Law or otherwise to consummate and
make effective the Transactions, (ii) to obtain from any Governmental
Authorities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained and to make any filings with or notifications
or submissions to any Governmental Authority required to be made by such Person
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the Transactions, and (iii) to make all necessary
filings, make such notices, and make any other required submissions, with
respect to this Agreement, that are necessary, proper or advisable under
applicable Law or otherwise are reasonably required to obtain the Company
Approvals and to comply with Law. Each Party shall cooperate fully with the
other Party and its Affiliates in promptly seeking such consents, licenses,
permits, waivers, approvals, authorizations or orders.

 

(b)         The Seller and Buyer shall use commercially reasonable efforts to
give all notices to, and obtain all consents from, all third parties that are
described in Schedule 7.1(b);  provided,  however, that neither Seller nor any
member of the Company Group shall be obligated to pay any consideration
therefor; and, provided,  further, Buyer shall not, and shall cause its
Affiliates not to, contact or otherwise communicate with any third party that
has a customer, vendor or other business relationship with any member of the
Company Group regarding this Agreement or the transactions contemplated hereby
without the prior written consent of the Seller.

 

(c)         The Seller may give prompt notice to Buyer upon becoming aware of
(i) any event or condition that might reasonably be expected to cause any of the
representations or warranties set forth in ARTICLE 3 and/or ARTICLE 4 not to be
true and correct at the Closing such that the conditions set forth in Sections
8.1 and 8.2 would not be satisfied or (ii) any material failure of the Seller or
any member of the Company Group to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. The Seller may also deliver a supplement to the Seller Disclosure
Schedules (a “Supplemental Disclosure Schedule”) to the Buyer with respect to
any event(s), fact(s), circumstance(s), change(s), condition(s) or matter(s)
first arising after the date of this Agreement or of which it became aware after
the date hereof. Any disclosure in any such Supplemental Disclosure Schedule
shall not be deemed to have cured any inaccuracy in or breach of any
representation or warranty contained in this Agreement, including for purposes
of the indemnification or termination rights contained in this Agreement or of
determining whether or not the conditions set forth in Sections

8.1 and 8.2 have been satisfied; provided,  however, that if Buyer has the right
to, but does not elect to, terminate this Agreement within five (5) Business
Days of its receipt of such Supplemental Disclosure Schedule, then Buyer shall
be deemed to have irrevocably waived any right to terminate this Agreement with
respect to such matter.

 

(d)         Buyer will give prompt notice to the Company upon becoming aware of
(i) any event or condition that might reasonably be expected to cause any of the
representations or warranties set forth in ARTICLE 5 not to be true and correct
at the Closing such that the conditions set forth in Sections 8.1 and 8.3 would
not be satisfied, or (ii) any material failure of Buyer to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement.

30

 

(e)        In the event that as of December 16, 2019, Buyer does not have a
reasonable good faith belief, as determined on the advice of Buyer’s auditors,
that audited Annual Financial Statements of the Company Group will be completed
by Buyer and its auditors on or before January 31, 2020, Buyer shall have the
right to delay the Closing Date from the anticipated date of January 2, 2020
(with such Closing being effective as of 12:01 a.m. Eastern Time on January 1,
2020) to January 31, 2020 (with such Closing being effective as of 11:59 p.m.
Eastern Time on January 31, 2020); provided all other conditions to Closing
pursuant to ARTICLE 8 have been satisfied or waived (if permissible).

 

7.2     Confidentiality; Public Announcements.

 

(a)         The Seller and Buyer each confirms that it has entered into the
Confidentiality Agreement and that it is bound by, and will abide by, the
provisions of the Confidentiality Agreement, the terms of which remain in full
force and effect. If this Agreement is terminated, the Confidentiality Agreement
will remain in full force and effect, and all copies of documents containing
confidential information of a disclosing party will be returned by the receiving
party to the disclosing party or be destroyed, as provided in the
Confidentiality Agreement. No party shall issue or otherwise make any public
announcement or communication pertaining to this Agreement or the Transactions
without the prior consent of Buyer (in the case of the Seller) or the Seller (in
the case of Buyer), except as required by applicable Law, provided that prior to
making any such public announcement or communication, Buyer shall permit Seller
to review and make comments to such public announcement or communication and
Buyer shall consider any comments of Seller in good faith and use good faith
efforts to incorporate such comments in the public announcement or
communication.

 

(b)         If the Buyer or any Affiliate of the Buyer is required to file any
registration, report, statement or other documentation with the Securities and
Exchange Commission or any other similar Governmental Authority (each, a “Public
Filing”), including a Form 10-Q and Form 10-K, which describes or references the
Transactions or the business or operations of any member of the Company Group
prior to the Closing Date, or includes as an exhibit to such filing this
Agreement or any other document executed in connection with the Transactions,
then prior to making any such Public Filing with a Governmental Authority, Buyer
shall permit Seller to review and make comments to the provisions of the Public
Filing which relate to the Transactions or the business or operations of any
member of the Company Group prior to Closing. Buyer shall consider any comments
of Seller in good faith and use good faith efforts to incorporate such comments
in the Public Filing. In the event that Seller shall request the redaction of
certain sensitive information in any exhibit to be filed, then Buyer will
cooperate with Seller in requesting that the Securities and Exchange Commission
or other similar Governmental Authority consent to such redaction.

 

7.3     Exclusivity. Except as set forth in this Section 7.3, from and after the
date hereof through the earlier of (a) termination of this Agreement in
accordance with the terms hereof or (b) the Closing Date (the “Specified Time”),
the Seller shall not, and shall cause its officers, directors, controlling
persons, equity holders, employees, representatives, agents, advisors and
Affiliates (collectively, the “Company Representatives”) not to, directly or
indirectly: (i) initiate, solicit, encourage or otherwise facilitate any
inquiry, proposal, offer or discussion with any Person (other than Buyer and its
Affiliates or representatives) concerning any Acquisition Proposal; (ii) furnish
any information concerning the business, properties or assets of any member of
the Company Group to any Person (other than Buyer and its Affiliates or
representatives) in connection with an inquiry, proposal or offer for an
Acquisition Proposal; or (iii) engage in discussions or negotiations with any
party (other than Buyer and its Affiliates or representatives) concerning any
such inquiry, proposal or offer for an Acquisition Proposal.

31

 

7.4     Employee Matters.

 

(a)         As of the Closing Date, Buyer shall, or shall cause a member of the
Company Group to, continue to employ each employee who is employed by the
Company Group immediately prior to the Closing Date (each, a “Post-Transaction
Employee”). For a period of at least one (1) year following the Closing Date,
Buyer shall provide, or shall cause the Company Group to provide, each Post-
Transaction Employee with a base salary or wage level, target bonus, commission,
or other incentive bonus opportunities (the “Bonus Opportunities”) and severance
compensation which are substantially comparable in the aggregate to the salary
or wage level, Bonus Opportunities and severance  compensation to which such
Post-Transaction Employee was entitled to receive immediately prior to the
Closing Date. Nothing in this Agreement shall limit the ability of Buyer or the
Company Group to terminate the employment of any Post-Transaction Employee at
any time and for any reason, including without cause, subject to the terms of
any applicable employment agreement.

 

(b)         For a period of at least one (1) year following the Closing Date,
Buyer shall provide, or shall cause the Company Group to provide, to each
Post-Transaction Employee employee benefits, perquisites and other terms and
conditions of employment that are substantially comparable in the aggregate to
the employee benefits, perquisites and other terms and conditions of employment
that are offered to similarly qualified employees of Buyer. Post-Transaction
Employees shall receive credit for the purposes of eligibility to participate in
and vesting under any plan or other program maintained by Buyer for service
accrued or deemed accrued prior to the Closing Date with the Company Group.
Additionally, Buyer shall waive, or cause to be waived, any limitations on
benefits relating to any pre-existing conditions to the same extent such
limitations are waived under any plan of Buyer or its Affiliates existing or to
be adopted.

 

(c)         In the event that the Closing occurs after December 31, 2019, Buyer
will ensure that Post-Transaction Employees will receive credit for amounts paid
toward their healthcare insurance deductible between January 1, 2020 and the
Closing Date.

 

7.5     Name Change. Within thirty (30) days following the Closing Date, the
Buyer shall change the entity name for McKesson Patient Care Solutions, Inc. to
remove any reference to “McKesson.” As promptly as practicable after such date,
the Buyer shall file in all jurisdictions in which such is qualified to do
business any documents necessary to reflect such change of name or to terminate
its qualification therein. Following the Closing Date, Buyer shall also promptly
cease using, and remove from all buildings and facilities occupied by Buyer or
the Company Group, any and all references to “McKesson” or any trademarks,
service marks, logos, or trade names of McKesson Corporation or any of its
Affiliates.

 

7.6     Debt. Except as set forth on Schedule 7.6, Seller has no Debt other than
Debt that will be paid in full prior to the Closing. Any Liens relating to the
assets or properties of the Company Group  shall immediately be released as of
the Closing except for ordinary course equipment liens as referenced on Schedule
3.11.

 

7.7     Tax Matters.

 

(a)         Tax Returns. The Seller (at the Seller’s expense) shall prepare and
file all Tax Returns for taxable periods ending on or before the Closing Date
that are first due (giving effect to any valid extensions properly obtained)
after the Closing Date (the “Seller Prepared Returns”). All Seller Prepared
Returns shall be prepared and filed on a basis consistent with past practice and
procedures for preparing similar Tax Returns and in a manner consistent with
past practice and accounting methods for the treatment of specific items on
similar Tax Returns, except as may be required by this Agreement or to the
extent inconsistent with applicable Law. The Seller shall, as soon as reasonably
practicable prior to

32

 

the filing thereof, provide the Buyer with a copy of any non-income Tax Seller
Prepared Return for the Buyer’s review and comment. The Seller shall consider in
good faith any comments to such Seller Prepared Return that are requested by the
Buyer reasonably in advance of the due date for filing thereof (giving effect to
any valid extensions properly obtained). Subject to Section 7.7(h), the Buyer
(at its expense) shall prepare and file all Tax Returns of each member of the
Company Group for all Straddle Periods (the “Buyer Prepared Returns”). All Buyer
Prepared Returns shall be prepared and filed on a  basis consistent with past
procedures of the applicable Company for preparing similar Tax Returns and in a
manner consistent with past practice and accounting methods for the treatment of
specific items on similar Tax Returns, except as may be required by this
Agreement or to the extent inconsistent with applicable Law. The Buyer shall, as
soon as reasonably practicable prior to the filing thereof, provide the Seller
with a copy of any Buyer Prepared Return for the Seller’s review and comment.
The Buyer shall consider in good faith any comment to such Buyer Prepared Return
that are requested by the Seller reasonably in advance of the due date for
filing thereof (giving effect to any valid extensions properly obtained).

 

(b)         Transfer Taxes. The Buyer shall pay all transfer,
documentary,  registration, sales, use and similar Taxes incurred in connection
with and as a result of the Transactions and that are not based on net income,
together with any related fees, penalties, interest and additions to such Taxes
(“Transfer Taxes”). The Seller and Buyer shall cooperate in timely preparing and
filing all Tax Returns  as may be required to comply with the provisions of such
Tax Laws. Each Party shall use its commercially reasonable efforts to avail
itself of any available exemptions from any Transfer Taxes, and shall cooperate
with the other Parties in timely providing any information and documentation
that may be necessary to obtain such exemptions.

 

(c)         Refunds. Buyer agrees to pay to the Seller the amount of any
Pre-Closing Tax Refund, (i) promptly upon the receipt of such Pre-Closing Tax
Refund or (ii) when used by Buyer or any of its Affiliates to credit an account
with a Tax Authority or to offset any Taxes for any taxable period (or portion
thereof) following the Closing Date. Upon the Seller’s request, Buyer agrees to,
and agrees to cause its Affiliates to, use commercially reasonable efforts to
obtain any Pre-Closing Tax Refund and agrees to permit the Seller to participate
in the efforts to obtain any Pre-Closing Tax Refund (and to assist Seller in
obtaining any Pre-Closing Tax Refund). If, and to the extent that, any
overpayment of Taxes previously paid by any member of the Company Group with
respect to a Pre-Closing Tax Period (determined in accordance with Section
7.7(e) with respect to any Straddle Period) is used to reduce the Taxes in a
taxable period (or portion thereof) following the Closing Date, then for the
avoidance of doubt such overpayment of Taxes shall be a “Pre-Closing Tax Refund”
for purposes of this Section 7.7(c).

 

(d)         Tax Contest.

 

(i)          In the event of any proposed audit, assessment, examination, claim
or other controversy or proceeding relating to Tax matters pursuant to which
Seller may incur an indemnification obligation under this Agreement (each, a
“Tax Contest”). Buyer shall, or shall cause the Company to, within fifteen (15)
days of becoming aware of such Tax Contest, notify the Seller in writing of such
Tax Contest. Such written notice shall contain factual information (to the
extent known) describing such Tax Contest in reasonable detail and shall be
accompanied by copies of any notice or other documents received from any Tax
Authority with respect to such Tax Contest. If Buyer fails to provide the Seller
with such written notice and, as a result, the Seller is actually prejudiced by
such failure, then the Seller shall be relieved of any indemnification
obligation under this Agreement with respect to such Tax Contest. This Section
7.7(d) shall govern the notice, control and conduct of any Tax Contest and
Section 9.5 shall not apply.

33

 

(ii)        The Seller shall have the right (but not the obligation) to control
any Tax Contest (at its own expense) that relates to one or more taxable periods
ending on or before the Closing Date; provided, that (a) Seller will provide
Buyer with written notice of its election to control such Tax Contest no later
than fifteen (15) days after receiving written notice of such Tax Contest from
Buyer, (b) the Seller will control such Tax Contest diligently and in good faith
and Buyer will have the right (but not the obligation) to participate (at its
own expense) in such Tax Contest as set forth in this Section 7.7(d)(ii), (c)
the Seller will keep Buyer reasonably apprised of the initiation and status of
such Tax Contest, and the Seller will consult with Buyer regarding such Tax
Contest upon Buyer’s request from time to time, (d) the Seller will provide to
Buyer copies of all correspondence received from the applicable Tax Authority,
(e) the Seller will provide to Buyer copies of, and the reasonable opportunity
to comment on, any written materials to be provided to the applicable Tax
Authority, including good faith consideration with respect to any such comments,
(f) Buyer will have the right to be present at, and participate fully in, any
meetings, conferences or appearances with respect to such Tax Contest, and (g)
the Seller will not settle, compromise or abandon such Tax Contest without the
prior written consent of Buyer (which consent shall not be unreasonably
withheld, delayed or conditioned); provided, that if Buyer does not give its
consent to any such requested settlement or compromise, the Seller shall not be
liable for any amount arising from such Tax Contest above its portion of the
settlement or compromise amount for which the Seller sought Buyer’s consent.

 

(iii)       Buyer shall control each Tax Contest (at its own expense) other than
any Tax Contest controlled by the Seller pursuant to Section 7.7(d)(ii);
 provided, that (A) Buyer will control such Tax Contest diligently and in good
faith, and the Seller will have the right (but not the obligation) to
participate (at the Seller’s expense) in such Tax Contest as set forth in this
Section 7.7(d)(iii), (B) Buyer will keep the Seller reasonably apprised of the
initiation and status of such Tax Contest, and Buyer will consult with the
Seller regarding such Tax Contest upon Seller’s request from time to time, (C)
Buyer  will provide to the Seller copies of all correspondence received from the
applicable Tax Authority, (D) Buyer will provide to the Seller copies of, and
the reasonable opportunity to comment on, any written materials to be provided
to the applicable Tax Authority, including good faith consideration with respect
to any such comments, (E) the Seller will have the right to be present at, and
participate fully in, any meetings, conferences or appearances with respect to
such Tax Contest, and (F) Buyer will not settle, compromise or abandon such Tax
Contest without the prior written consent of the Seller (which consent shall not
be unreasonably withheld, delayed or conditioned).

 

(e)         Straddle Periods. For all purposes under this Agreement, the amount
of any Taxes (or Tax refund or amount credited against Tax) attributable to the
portion of any Straddle Period ending on the Closing Date shall: (i) in the case
of any property Tax and other Tax imposed on a periodic basis without regard to
income, receipts, sales, purchases or wages, be equal to the amount of such Tax
for the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days in the portion of such Straddle Period ending on the
Closing Date and the denominator of which is the total number of days in such
Straddle Period; and (ii) in the case of any other Taxes, be equal to the amount
which would be payable based upon a hypothetical closing of the taxable year on
the Closing Date; provided, that any item determined on an annual or periodic
basis (including amortization and depreciation deductions) shall be allocated to
the Pre-Closing Tax Period based on the relative number of days in such portion
of the Straddle Period as compared to the number of days in the entire Straddle
Period.

 

(f)         Seller Tax Matters. Buyer will not take, agree to or otherwise
initiate (or permit any Person to do the same) any Seller Tax Matter, without
the prior written consent of the Seller (which consent shall not be unreasonable
withheld, conditioned or delayed). For purposes of this Section 7.7(f) the term
“Seller Tax Matter” shall mean (i) amending, re-filing or supplementing any Tax
Return of any member of the Company Group for a Pre-Closing Tax Period, (ii)
filing any Tax Return of any member

34

 

of the Company Group in any jurisdiction if the applicable member of the Company
Group did not file a comparable Tax Return involving similar Tax items in such
jurisdiction in the immediately preceding Tax period, (iii) extending or waiving
any statute of limitations with respect to any Tax of any member of the Company
Group; (iv) filing any ruling or similar request with any Tax Authority
regarding any member of the Company Group that would affect a Pre-Closing Tax
Period, (v) initiating or entering into any voluntary disclosure agreement or
program with any Tax Authority regarding any Tax (whether asserted or
unasserted) or Tax Return (whether filed or unfiled) of any member of the
Company Group, (vi) making any Tax election with respect to any member of the
Company Group with an effect on or before the Closing Date, (vii) taking any
action outside of the ordinary course of business on the Closing Date that could
reasonably be expected to increase the Tax liability of the Seller (other than
as expressly contemplated by this Agreement), (viii) surrendering any right to
claim, or otherwise, limiting the availability of any, Pre-Closing Tax Refund,
and (ix) making, or causing to be made, any election under Section 336 or 338 of
the Code (or any corresponding provision of state, local or foreign Law) with
respect to any member of the Company Group.

 

(g)         Cooperation. Each Party shall cooperate as and to the extent
reasonably requested by the other Parties, in connection with the preparation
and filing of Tax Returns and any proceeding, investigation, audit or review by
a Tax Authority with respect to Taxes, in each case with respect to the Company
Group. Such cooperation shall include signing any Tax Returns, amended Tax
Returns, claims or other documents necessary to settle any Tax controversy,
executing powers of attorney, the retention and (upon the other Party’s request)
the provision of records and information in such Party’s control which are
reasonably relevant to any such proceeding, investigation, audit or review and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided under this Agreement. Buyer
agrees (i) to retain all books and records with respect to Tax matters pertinent
to each member of the Company Group relating to any taxable period beginning
before the Closing Date until the expiration of the Seller’s indemnification
obligations under this Agreement with respect to Tax matters, and to abide by
all record retention agreements entered into with any Tax Authority, and (ii)
until the expiration of the Seller’s indemnification obligations under this
Agreement with respect to Tax matters, to give the Seller reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the Seller so requests, Buyer will allow the Seller to take
possession of such books and records.

 

(h)         Transaction Expenses Deductions. Any and all deductions, losses or
other Tax benefits with respect to any Transaction Expenses, any repayment of
Debt or any other deductible payments arising in connection with the
Transactions economically borne by the Seller shall be taken into account and
deducted in a Pre-Closing Tax Period to the extent not specifically prohibited
by applicable Law, and any such deductions, losses or benefits for a Straddle
Period shall be attributed to the portion of such Straddle Period ending on the
Closing Date. For purposes of the foregoing, the parties agree to cause, as
applicable, each member of the Company Group to adopt the seventy percent (70%)
safe harbor (and to include the applicable election statements with the
appropriate Tax Returns) with respect to the deduction of any “success-based
fees” in accordance with IRS Revenue Procedure 2011-29 to the extent that the
transactions contemplated by this Agreement are properly treated as a “covered
transaction” within the meaning of Treasury Regulations Section 1.263(a)-5 (it
being understood that nothing in this Section 7.7(h) shall be interpreted as a
representation that any expense is a “success based fee”).

 

(i)          Tax Treatment. Buyer is a limited liability company for federal
income Tax purposes and shall cause the Company Group to join its “consolidated
group” (within the meaning of Treasury Regulations Section 1.1502-1(h))
effective as of the beginning of the day on the day following the Closing Date.
To the extent not inconsistent with applicable Law, the parties agree with
respect to certain Tax matters as follows: (i) to treat the Company Group as
having a taxable year that ends for income Tax purposes as of the end of the day
on the Closing Date; (ii) subject to clause (iii) of this

 

35

 

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

Section 7.7(i), to allocate all items of deduction, loss and credit of the
Company Group accruing, or otherwise taken into account, on the Closing Date to
the taxable period ending on the Closing Date pursuant to Treasury Regulations
Section 1.1502-76(b)(1)(ii)(A)(1) (and not pursuant to the “next day” rule under
Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) or pursuant to the ratable
allocation method under Treasury Regulations Sections 1.1502-76(b)(2)(ii) or
1.1502-76(b)(2)(iii)); and (iii) to report all items of taxable income or gain
of the Company Group arising on the Closing Date following the Closing from any
transaction or event taken at the direction of Buyer or any of its Affiliates
outside of the ordinary course of business and not specifically contemplated by
this Agreement on Buyer’s federal income Tax Return to the extent permitted
under Treasury Regulations Section 1.1502-76(b)(1)(ii)(B).

 

7.8     Indemnification of Directors, Managers and Officers. Immediately
following the Closing, McKesson Corporation shall continue to maintain and pay
the premium for directors’ and officers’ liability insurance for each present or
former director, officer or manager (however designated) of any member of the
Company Group for a period of two (2) years following the Closing Date relating
to any matter arising prior to the Closing Date. This insurance shall be the
sole remedy for the directors and officers in respect of any claim relating to
any matter arising prior to the Closing Date.

 

7.9     Taking of Necessary Action; Further Action. Following the execution of
this Agreement, Buyer will be provided such access to personnel and records as
appropriate to finalize items necessary for the transition of the operations
effective as of the Closing. If, at any time after the Closing Date, any further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Buyer with full right, title and possession in and to the Acquired
Equity, the officers and directors of the Buyer, Seller and members of the
Company Group will take all such lawful and necessary action.

 

7.10    [***]

 

7.11    Completion of Service Schedule. The Parties acknowledge that as of the
date hereof the Service Schedule to the Transition Services Agreement has not
yet been fully completed. The Parties agree that they shall use reasonable, good
faith efforts to complete such Service Schedule as soon as practicable following
the execution of this Agreement.

 

ARTICLE 8

CONDITIONS TO CLOSING

 

8.1     Conditions to the Obligations of Each Party. The respective obligations
of each Party to effect the Transactions are subject to the satisfaction at or
prior to the Closing of the following conditions, any or all of which may be
waived in writing by the Parties hereto:

 

(a)         No Injunctions. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or

 

36

 

permanent) that is in effect and has the direct effect of making the
Transactions illegal or otherwise directly prohibiting consummation of the
Transactions.

 

8.2     Additional Conditions to the Obligations of Buyer. The obligations of
Buyer to effect the Transactions also are subject to the satisfaction at or
prior to the Closing of the following conditions, any or all of which may be
waived in writing by Buyer:

 

(a)         Representations and Warranties. Each of the representations and
warranties concerning the Company Group and Seller contained in ARTICLE 3 and
ARTICLE 4 of this Agreement and in any certificate delivered pursuant hereto
(without giving effect to any Company Material Adverse Effect or other
materiality qualifier therein) shall be true and correct as of the date hereof
and as of the Closing Date with the same effect as if made at and as of such
date (other than those representations and warranties made as of such specific
date or dates, which shall be true and correct as of such date or dates), except
in each case where the failure to be so true and correct has not had, and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

 

(b)         Agreements and Covenants. The Seller and each member of the Company
Group shall have performed or complied in all material respects with all of
their obligations, agreements and covenants required by this Agreement to be
performed or complied with by them at or prior to the Closing, any of which may
be waived in writing by Buyer.

 

(c)         Officers’ Certificate. Seller shall have delivered to Buyer a
certificate, dated as  of the Closing Date and executed on behalf of Seller by
an authorized officer of Seller certifying compliance with the conditions set
forth in Section 8.2(a) and (b).

 

(d)         Approval. This Agreement shall have been duly and validly adopted by
Seller in compliance with applicable Law and the Governing Documents of the
Seller, each as in effect on the date of such approval and adoption.

 

(e)         Secretary’s Certificate. Each member of the Company Group shall
have  delivered to Buyer a certificate, dated as of the Closing Date and
executed on behalf of such Company by its Secretary, certifying such Company’s
(i) Governing Documents, and (ii) board resolutions approving the Transactions
and adopting this Agreement.

 

(f)         Net Working Capital Certificate. The Seller shall have delivered to
Buyer the  Net Working Capital Certificate.

 

(g)         Closing  Statement.     The Seller shall have delivered to Buyer the
Closing Statement.

 

(h)         Reserved.

 

(i)          Required Consents. The Seller shall have obtained and delivered
evidence to Buyer of the third party consents, assignments, waivers,
authorizations or other certificates set forth on Schedule 7.1(b), if any, in a
form reasonably acceptable to Buyer.

 

(j)          FIRPTA Certificate. The Seller shall have delivered to Buyer a
non-foreign affidavit, dated as of the Closing Date, sworn under penalty of
perjury and in form and substance required under the of Treasury Regulations
issued pursuant to Section 1445 of the Code stating that the Seller is not a
“foreign person” for purposes of Sections 1445 of the Code.

37

 

(k)        Transition Services Agreement. The Seller shall have delivered to
Buyer the Transition Services Agreement, substantially in the form of Exhibit B
(the “Transition Services Agreement”), with the Service Schedule fully completed
and attached thereto, dated as of the Closing Date and executed by Seller.

 

(l)          Moorestown Facility License Agreement. The Seller shall have
delivered to Buyer the Moorestown Facility License Agreement with respect to the
temporary use and occupation of a portion of the Seller’s facilities located in
Moorestown, New Jersey by Buyer, substantially in the form of Exhibit C (the
“Moorestown Facility License Agreement”), dated as of the Closing Date and
executed by Seller.

 

(m)        Auburn Facility Sublease. The Seller shall have delivered to Buyer
the Auburn Facility Sublease with respect to the subletting of a portion of the
premises located at 1667 Shug Jordan Parkway, Auburn, Alabama, substantially in
the form of Exhibit D (the “Auburn Facility Sublease”), dated as of the Closing
Date and executed by Seller.

 

8.3     Additional Conditions to the Obligations of the Seller. The obligations
of the Seller to effect the Transactions also are subject to the satisfaction at
or prior to the Closing of the following conditions, any or all of which may be
waived in writing by the Seller:

 

(a)         Representations and Warranties. Each representation and warranty of
Buyer set forth in this Agreement and any certificate or other document
delivered pursuant hereto shall be true and correct in all material respects
(other than representations and warranties qualified by materiality or material
adverse effect and Buyer’s Fundamental Representations which shall be true in
all respects) on and as of the date hereof and as of the Closing with the same
force and effect as if made at and as of such date (other than those
representations and warranties made as of such specific date or dates, which
shall be true and correct as of such date or dates).

 

(b)         Agreements and Covenants. Buyer shall have performed or complied
with all of its respective obligations, agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Closing.

 

(c)         Officers’ Certificate. Buyer shall have delivered to Seller a
certificate, dated as  of the Closing Date and executed by a duly authorized
officer of Buyer, certifying compliance with the conditions set forth in
Sections 8.3(a) and (b).

 

(d)         Secretary’s Certificate. Buyer shall have delivered to the Seller a
certificate, dated as of the Closing Date and executed on behalf of Buyer by its
Secretary, certifying the Buyer’s (i) Governing Documents and (ii) board
resolutions approving the Transactions and adopting this Agreement.

 

(e)         Transition Services Agreement. Buyer shall have delivered to the
Seller the Transition Services Agreement, with the Service Schedule fully
completed and attached thereto, dated as of the Closing Date and executed by the
Buyer.

 

(f)         Moorestown Facility License Agreement. Buyer shall have delivered
to  the Seller the Moorestown Facility License Agreement, dated as of the
Closing Date and executed by Buyer.

 

(g)         Auburn Facility Sublease. Buyer shall have delivered to Seller the
Auburn Facility Sublease, dated as of the Closing Date and executed by Buyer.

38

 

8.4     Frustration of Closing Conditions. Neither Buyer (on the one hand) nor
the Seller (on the other hand) may rely on the failure of any condition set
forth in Section 8.1,  Section 8.2 or Section 8.3, as the case may be, if such
failure was caused by such Party’s failure to comply with any provisions of this
Agreement.

 

ARTICLE 9

INDEMNIFICATION; RELEASE

 

9.1     Indemnification by the Seller. Subject to the terms and conditions of
this ARTICLE 9,  upon the Closing of the Transactions, the Seller hereby agrees
to indemnify, defend and hold harmless Buyer and Buyer’s Affiliates and their
respective officers, directors, employees, agents, representatives, successors
and permitted assigns (each, a “Buyer Indemnified Party”) from and against any
and all Damages actually incurred or sustained by, or imposed upon, the Buyer
Indemnified Parties resulting from or arising out of:

 

(a)         any breach of a representation or warranty of the Company Group set
forth in ARTICLE 3 of this Agreement or in any Transaction Document (excluding
the Excluded Documents) delivered in connection herewith;

 

(b)         any breach of a representation or warranty of the Seller set forth
in ARTICLE 4 of this Agreement or in any Transaction Document (excluding the
Excluded Documents) delivered in connection herewith; and

 

(c)         any Indemnified Taxes, to the extent not included in the calculation
of Actual Net Working Capital, Actual Debt or Actual Transaction Expenses (as
finally determined in accordance with Section 2.4).

 

9.2     Indemnification by Buyer. Subject to the terms and conditions of this
ARTICLE 9, upon the Closing of the Transactions, Buyer and each of its
Affiliates (including, from and after the Closing, the members of the Company
Group) (collectively, the “Buyer Indemnifying Parties”), hereby jointly and
severally, agree to indemnify, defend and hold harmless the Seller and its
respective Affiliates, officers, directors, employees, agents, representatives,
successors and assigns (each, a “Seller Indemnified Party”), from and against
any and all Damages incurred or sustained by, or imposed upon, the Seller
Indemnified Parties resulting from or arising out of:

 

(a)         any breach of any representation or warranty of Buyer set forth in
this Agreement or any Transaction Document (excluding the Excluded Documents)
delivered in connection herewith; and

 

(b)         any breach or non-fulfillment of any covenant or agreement of Buyer,
set forth in this Agreement or any Transaction Document (excluding the Excluded
Documents) delivered in connection herewith or any breach or non-fulfillment by
the Company Group of any covenant or agreement required to be performed after
Closing contained in this Agreement or any Transaction Document.

 

9.3     Survival; Time for Claims; Notice of Claims. Subject to the terms and
other provisions of this Agreement:

 

(a)         Survival Periods:

 

(i)          Representations and Warranties. The representations and warranties
of the Company Group, Seller and Buyer set forth in this Agreement or any
Transaction Document delivered

39

 

in connection herewith shall survive the Closing and remain in full force and
effect until the date that is eighteen (18) months from the Closing Date (the
“General Survival Date”); provided, that (A) the Fundamental Representations
(other than the representations and warranties set forth in Section 3.9  (Tax
Matters) (the “Tax Representations”)) shall survive the Closing and shall remain
in full force and effect until the date that is three (3) years from the Closing
Date; (B) the Tax Representations shall survive the Closing and shall remain in
full force and effect until the date of expiration of the applicable statute of
limitations; and (C) the representations and warranties set forth in the
Excluded Documents shall survive the Closing and remain in full force and effect
in accordance with their terms.

 

(ii)         Covenants and Agreements. The covenants and agreements of the
Company Group and Seller set forth in this Agreement or any Transaction Document
delivered in connection herewith that by their terms are required to be
performed at or prior to the Closing shall not survive and will terminate at the
Closing, and any covenants and agreements of the Company Group that by their
terms are to be performed after the Closing shall survive the Closing and remain
in full force and effect for the period expressly contemplated by their terms;
provided, that, (A) the indemnification obligations set forth in Section 9.1(c)
shall survive the Closing until the date of expiration of the applicable statute
of limitations; and (B) the covenants and agreements set forth in the Excluded
Documents shall survive the Closing and remain in full force and effect in
accordance with their terms. The covenants and agreements of Buyer set forth in
this Agreement or any Transaction Document delivered in connection herewith
shall survive the Closing and remain in full force and effect for the period
expressly contemplated by their terms; provided, that, (Y) the indemnification
obligations set forth in Section 9.2 shall survive the Closing and remain in
full force and effect until expiration of the applicable statute of limitations
period; and (Z) the covenants and agreements set forth in the Excluded Documents
shall survive the Closing and remain in full force and effect in accordance with
their terms.

 

(b)         Time and Notice of Claims. No claim for indemnification may be
asserted against an Indemnifying Party for breach of any representation,
warranty, covenant or agreement set forth in this Agreement or any Transaction
Document delivered in connection herewith, unless written notice of such claim
is given to (i) the Seller (in the event Seller is the Indemnifying Party) or
(ii) Buyer (on behalf of the Buyer Indemnifying Parties in the event such
Persons are the Indemnifying Party) in accordance with Section 9.5, in respect
of a Third Party Claim, or Section 9.6, in respect of a Direct Claim, as
applicable, on or prior to the date on which the representation, warranty,
covenant or agreement ceases to survive in accordance with Section 9.3(a) (each
a “Notice of Claim”). Notwithstanding the foregoing, any claim for
indemnification that may be sought under this ARTICLE 9, and the indemnity with
respect thereto, shall survive the time at which it would otherwise terminate
pursuant to Section 9.3(a) if written notice of such claim shall have been
properly given to (i) the Seller (in the event Seller is the Indemnifying Party)
or (ii) Buyer (on behalf of the Buyer Indemnifying Parties in the event such
Persons are the Indemnifying Party) prior to such time, in which case, such
representation, warranty, covenant or agreement with respect to such claim shall
survive solely with respect to the claim subject to such Notice of Claim until
such claim for indemnification is finally resolved. It is the express intent
of  the Parties that, if the applicable survival period for an item as
contemplated by Section 9.3(a) (the “Applicable Survival Period”) is shorter
than the statute of limitations that would otherwise have been applicable to
such item, then, by contract resulting from arms’ length negotiations between
sophisticated parties represented by counsel, the applicable statute of
limitations with respect to such item shall not apply, and no Party shall be
obligated to indemnify, defend, hold harmless, compensate or reimburse any other
Party with respect to any such particular claim, except to the extent that any
such representations, warranties, covenants and agreements contained herein
survive in whole or in part after the Closing pursuant to the terms of this
Agreement, and then only to such extent.

 

40

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

9.4     Liability Limitations

 

(a)         Mini-Basket. Except for Fundamental Damages, the Buyer Indemnified
Parties shall not be entitled to assert any claim for Damages under Section 9.1
unless and until such time as the total amount of all Damages that have been
suffered or incurred by any Buyer Indemnified Party arising from or related to
an individual claim (or series of one or more claims arising from the same or
substantially similar facts or circumstances) exceeds Twenty Thousand Dollars
($20,000) (the “Mini- Basket”) and any such claim not exceeding the Mini-Basket
shall not aggregate and shall be excluded from the calculation of the
Deductible.

 

(b)         Deductible.  The Buyer Indemnified Parties shall not be entitled to
recover indemnification for Damages under Section 9.1 unless and until the
aggregate amounts of all Damages under Section 9.1 are in excess of [***] at
which time the Buyer Indemnified Parties shall be entitled to indemnification
for all Damages actually incurred or sustained in excess of such amount subject
to the applicable limitations set forth herein (the “Deductible”).

 

 

(c)         Maximum Indemnification Amounts.

 

(i)          Except for Fundamental Damages, the maximum amount that the Buyer
Indemnified Parties (in the aggregate) shall be entitled to recover from the
Seller for Damages under Section 9.1 is limited to [***] (the “General Cap”).
Except for Fundamental Damages, recovery by the Buyer Indemnified Parties for
Damages under Section 9.1 from the Seller shall be limited to the General Cap
(it being understood and agreed that the Buyer Indemnified Parties shall have no
further right to indemnification from the Seller for items subject to the
General Cap).

 

(ii)          The maximum amount that the Buyer Indemnified Parties shall be
entitled to recover under this Agreement for Fundamental Damages, when added to
all other Damages, is limited to [***] (the “Fundamental Damages Cap”),
provided,  however, Buyer may recover, when added to all other Damages, up to,
 but not in excess of, [***] with respect to any Government Health Care Program
Repayment Damages.

 

(iii)        Subject to Sections 9.4(c)(i) and 9.4(c)(ii), the maximum amount
that the Buyer Indemnified Parties shall be entitled to recover from Seller for
Damages arising under this Agreement (in the aggregate) is limited to [***] less
any insurance proceeds and indemnification payments (the “Aggregate Cap”). In no
event shall the amount payable by the Seller pursuant to this Agreement exceed
the Aggregate Cap.

 

(d)         [***]

 

41

Certain information in this document identified by brackets has been omitted
because it is both not material and would be competitively harmful if publicly
disclosed.

 

(e)         [***]

 

(f)          Mitigation. Each Party will (and will cause its Affiliates to) use
commercially reasonable efforts to pursue any rights and remedies available to
mitigate any Damages for which indemnification is or may be provided to it under
this ARTICLE 9, consistent with the efforts such Party has or would use to
appropriately mitigate Damages for its own account.

 

(g)         Calculation of Damages. All Damages for which the Buyer Indemnified
Parties  are otherwise entitled to indemnification under this ARTICLE 9 shall be
reduced by the amount of any insurance proceeds, indemnification payments and
other third party recoveries or reimbursement arrangements to which any Buyer
Indemnifying Party or any of their Affiliates (including the Company Group) is
entitled to in respect of such Damages. Without limiting the generality of the
foregoing, in the event an Indemnified Party is, or is reasonably expected to
be, entitled to any insurance proceeds in   respect of any Damages for which
such Indemnified Party is or may be entitled to  indemnification pursuant to
this ARTICLE 9 under any insurance policy, Contract, or other third-party
recovery or reimbursement arrangement, the Indemnified Party shall, and shall
cause its Affiliates (including, with respect to Buyer Indemnified Parties, the
Company Group) to, concurrent with providing a Notice of  Claim in accordance
with this Agreement, to proceed first by making a claim therefor (or submitting
an initial notification of loss in the event the retention has not been met)
under such policy and using its commercially reasonable efforts to seek recovery
for and obtain proceeds in respect of such Damages (subject to the applicable
retention amounts and other terms and conditions under such insurance policy
being met). In the event that any such insurance proceeds, indemnity payments or
other third-party recoveries are received or realized by any Buyer Indemnified
Party or any of their respective Affiliates subsequent to receipt by the Buyer
Indemnified Parties of any indemnification payment hereunder in respect of the
claims to which such insurance proceeds, indemnity payments or
other  third-party  recoveries relate, appropriate refunds shall be made
promptly by Buyer to the Seller of all or the relevant portion of such
indemnification payment.

 

(h)         Limitations on Tax Indemnity. Notwithstanding anything to the
contrary in this Agreement, Seller shall not have any liability under this
Agreement or any other Transaction Document, including under this ARTICLE 9,
with respect to any Taxes or Damages: (i) resulting from or arising out  of any
transaction or event taken at the direction of any Buyer Indemnified Party after
Closing that is not

 

42

 

specifically contemplated by this Agreement (including any transaction
undertaken in connection with the financing of any obligation contemplated by
this Agreement); (ii) taken into account as a direct or indirect adjustment to
the Purchase Price (as finally determined) or otherwise economically borne by
the Seller; (iii)  with respect to any taxable period (or portion thereof)
following the Closing Date; (iv) resulting from any breach or non-fulfillment by
any Buyer Indemnified Party of any covenant or agreement contained in this
Agreement or any other Transaction Document relating to Tax matters; or (v) due
to the unavailability in any Tax period (or portion thereof) beginning after the
Closing Date of any net operating loss, net operating loss carryforward, capital
loss, capital loss carryforward, Tax credit, Tax credit carryforward or other
Tax attribute of any member of the Company Group from a Tax period (or portion
thereof) ending on or before the Closing Date. Nothing contained in this Section
9.4(h) shall be construed to create (or expand) matters with respect to which
the Seller has an indemnification obligation under ARTICLE 9.

 

(i)          Limitation on Damages. Under no circumstances shall any Buyer
Indemnified Party be entitled to (and Buyer on behalf of itself and each other
Buyer Indemnified Party disclaims) indemnification pursuant to this ARTICLE 9 or
otherwise for Damages that are special, indirect, consequential, multiples of
any financial or business measure (including earnings, sales or other
benchmarks), expectancy, punitive, exemplary or other similar Damages, including
diminution in value, lost profits, lost revenues, business interruptions, or
loss of business opportunity or reputation. No Buyer Indemnified Party shall be
entitled to recover Damages in respect of any claim or otherwise obtain
reimbursement or restitution more than once with respect to any claim hereunder.

 

(j)          Other Limitations. Notwithstanding anything to the contrary set
forth herein, no Buyer Indemnified Party shall be entitled to indemnification
pursuant to this ARTICLE 9 or otherwise for (i) any item disclosed in the Seller
Disclosure Schedules (as interpreted in accordance with this Agreement), (ii)
any liability accrued on, reserved for or reflected on the Financial Statements,
(iii) any representation, warranty, covenant, agreement or condition waived by
Buyer on or prior to the Closing or (iv) Damages to the extent caused,
contributed or exacerbated by any action or omission of Buyer or any of its
Affiliates.

 

(k)         Exclusive Remedy. Buyer, on behalf of itself and each of its
Affiliates (including the members of the Company Group after the Closing Date)
and its successors and assigns, hereby acknowledges and agrees (for itself and
its Affiliates and Buyer Representatives) that, from and after the Closing, the
sole and exclusive remedy of Buyer, and each of its respective Affiliates
(including the members of the Company Group after the Closing Date) and Buyer
Representatives with respect to all matters arising out of, relating to or
connected with this Agreement, the Transaction Documents and the Transactions
shall be the indemnification provisions set forth in this ARTICLE 9. In
furtherance of the foregoing, Buyer (on behalf of itself and its Affiliates and
Buyer Representatives (including, following the Closing, the members of the
Company Group)) hereby waives, from and after the Closing, any and all rights,
claims and causes of action which Buyer or its Affiliates and Buyer
Representatives may have against Seller or any member of the Company Group or
any of their Affiliates arising under or based upon any Contract, Law or
otherwise except pursuant to the indemnification provisions set forth in this
ARTICLE 9.

 

9.5     Third Party Claims.

 

(a)         Notice of Third Party Claims. All claims for indemnification made
under this Agreement resulting from, related to or arising out of a third-party
claim against an Indemnified Party (a “Third Party Claim”) shall be made in
accordance with the procedures set forth in this Section 9.5. An Indemnified
Party shall give prompt written notification to Buyer (if the Buyer Indemnifying
Parties are the Indemnifying Party) or to the Seller (if the Seller is the
Indemnifying Party) of the commencement of

43

 

any Legal Proceeding relating to a Third Party Claim for which indemnification
may be sought or, if earlier, upon the written assertion of any such Third Party
Claim; provided, that no delay on the part of the Indemnified Party in notifying
Buyer or the Seller (as applicable) shall relieve such Indemnifying Party from
any obligation under this ARTICLE 9, except to the extent (i) notice is
delivered after the applicable survival period for such claim (in which case the
Indemnified Party shall not be entitled to assert such claim) or (ii) such delay
actually prejudices the Indemnifying Party. Such notice by the Indemnified Party
shall include a description in reasonable detail (to the extent known by the
Indemnified Party) of the facts constituting the basis for such Third Party
Claim, the provisions of this Agreement alleged to have been breached, the
amount of the Damages claimed, and shall include copies of all written evidence
thereof.

 

(b)         Assumption of Defense.

 

(i)          In the event of any Third Party Claim, the Indemnifying Party, by
written notice delivered to the Indemnified Party within fifteen (15) days after
receiving notice of the Third Party Claim, may elect to assume the defense of
the Third Party Claim. If the Indemnifying Party so assumes any such defense,
the Indemnifying Party shall conduct the defense of the Third Party Claim
actively and diligently. If Seller is the Indemnifying Party, it shall not
compromise or settle a Third Party Claim, or consent to entry of any judgment in
respect thereof, which would reasonably be expected to result in Damages in
excess of the Seller’s indemnification obligation, without the prior written
consent of the Buyer (on behalf of the Buyer Indemnified Parties), which consent
shall not be unreasonably withheld or delayed. If the Buyer Indemnifying Parties
are the Indemnifying Party, the Buyer Indemnifying Parties shall not compromise
or settle any Third Party Claim, or consent to the entry of any judgment in
respect thereof, without the prior written consent of Seller, which consent
shall not be unreasonably withheld or delayed.

 

(ii)         Notwithstanding Section 9.5(b)(i), if Seller is the Indemnifying
Party, Buyer shall nonetheless have the right to assume and control the defense
of the following Third Party Claims: (A) Third Party Claims involving a criminal
investigation or criminal violation; (B) Third Party Claims involving any Civil
Investigative Demand; (C) Third Party Claims involving any qui tam or
whistleblower complaint; or (D) Third Party Claims which would reasonably be
expected to result in the revocation or termination of any Buyer Indemnified
Party’s right to participate in Medicare or Medicaid, loss of licensure, or
consent to entry of any judgment in respect thereof.

 

(iii)       Notwithstanding Section 9.5(b)(i), if the Buyer Indemnifying Parties
are the Indemnifying Party as triggered by the terms of Section 9.2, Seller
shall nonetheless have the right to assume and control the defense of the
following Third Party Claims: (A) Third Party Claims involving a criminal
investigation or criminal violation; (B) Third Party Claims involving any Civil
Investigative Demand; (C) Third Party Claims involving any qui tam or
whistleblower complaint; or (D) Third Party Claims which would reasonably be
expected to result in the revocation or termination of Seller’s or any Affiliate
of Seller’s right to participate in Medicare or Medicaid, loss of licensure, or
consent to entry of any judgment in respect thereof.

 

(c)         Participation in Assumed Defense. In the event that an Indemnifying
Party assumes the defense of any Third Party Claim in accordance with Section
9.5(b) above, the Indemnified Party may retain separate counsel and participate
in the defense of the Third Party Claim, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party. The Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to such Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
The Indemnified Party will, and will cause its Affiliates to, assist and
cooperate in the defense thereof and will provide reasonable access to
documents, assets, properties, books, and

44

 

records reasonably requested by the Indemnifying Party and will make available
all officers, directors, and employees of the Indemnified Party and its
Affiliates reasonably requested by the Indemnifying Party for investigation,
depositions, and trial.

 

(d)         Obligation to Control Defense. In the event that the Indemnifying
Party fails or elects not to assume the defense of any Third Party Claim that
such Indemnifying Party had the right to assume under Section 9.5(b) above, the
Indemnified Party shall have the right to undertake the defense and, if
undertaken, shall conduct the defense actively and diligently, but such defense
shall be at the expense of the Indemnifying Party. If the Indemnified Party
undertakes the defense of such Third Party Claim, then the Indemnified Party
shall not compromise or settle such Third Party Claim, or consent to entry of
any judgment in respect thereof, without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

9.6     Direct Claims. Any claim by an Indemnified Party on account of Damages
which do not result from a Third Party Claim (such claim, a “Direct Claim”)
shall be asserted by giving prompt written notification to Buyer (if the Buyer
Indemnifying Parties are the Indemnifying Party) or the Seller (if the Seller is
the Indemnifying Party), as applicable, of the commencement of any action, suit,
proceeding or process relating to a Direct Claim for which indemnification may
be sought; provided, that no delay on the part of the Indemnified Party in
notifying Buyer or Seller (as applicable) shall relieve such Indemnifying Party
from any obligation under this ARTICLE 9, except to the extent (a) notice is
delivered after the applicable survival period for such claim (in which case the
Indemnified Party shall not be entitled to assert such claim) or (b) such delay
actually prejudices the Indemnifying Party. Such notice by the Seller or Buyer,
as applicable, shall include a description in reasonable detail (to the extent
known by the Indemnified Party) of the facts constituting the basis for such
Direct Claim, the provisions of this Agreement alleged to have been breached,
the amount of the Damages claimed, and shall include copies of all written
evidence thereof. The Indemnified Party shall allow Buyer (if the Buyer
Indemnifying Parties are the Indemnifying Party) or the Seller (if the Seller is
the Indemnifying Party), as applicable, and its professional advisors to
investigate the matter or circumstance alleged to give rise to the Direct Claim,
and whether and to what extent any amount is payable in respect of the Direct
Claim, and the Indemnified Party will, and will cause its Affiliates to, assist
and cooperate in Buyer’s (if the Buyer Indemnifying Parties are the Indemnifying
Party) or the Seller’s (if the Seller is the Indemnifying Party) investigation
by providing reasonable access to documents, assets, properties, books, and
records reasonably requested by Buyer (if the Buyer Indemnifying Parties are the
Indemnifying Party) or the Seller (if the Seller is the Indemnifying Party), and
will make available all officers, directors, and employees reasonably requested
by Buyer or the Seller, as applicable.

 

9.7     Treatment of Indemnification Payments. All indemnification and other
payments under this ARTICLE 9 shall, to the extent permitted by applicable Law,
be treated for all Tax purposes as adjustments to the Purchase Price.

 

ARTICLE 10

TERMINATION, AMENDMENT AND WAIVER

 

10.1   Termination. This Agreement may be terminated at any time prior to the
Closing by certain of the Parties as provided below:

 

(a)         by mutual written consent of Buyer and the Seller;

 

(b)         by Buyer, upon a material breach of any representation, warranty,
covenant or agreement on the part of the Company Group or Seller set forth in
this Agreement which (i) would give rise to the failure of a condition set forth
in Section 8.2 and (ii) has not been cured within ten (10)

45

 

Business Days following the earlier of receipt by Buyer of written notice of
such breach from the Seller or receipt by the Seller of written notice of such
breach from Buyer (a “Buyer Terminable Breach”);

 

(c)         by the Seller (on behalf of itself and the Company Group), upon a
material breach of any representation, warranty, guarantee, covenant or
agreement on the part of Buyer set forth in this Agreement (a “Company
Terminable Breach”);

 

(d)         by either Buyer or the Seller, if there shall be any Law, order,
injunction or decree which is final and nonappealable preventing the
consummation of the Transactions or that makes consummation of the Transactions
illegal; or

 

(e)         by either Buyer or the Seller, if the Closing shall not have
occurred by January 31, 2020 (the “Outside Date”); provided,  however, that the
right to terminate this Agreement under this Section 10.1(e) shall not be
available to any Party whose failure to perform any material covenant, agreement
or obligation hereunder has been the principal cause of the failure of the
Closing to occur on or before such Outside Date.

 

10.2   Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 10.1, this Agreement shall forthwith become void, there
shall be no liability on the part of Buyer, Company Group or the Seller or any
of their respective Affiliates, officers, directors, stockholders, managers or
partners and all rights and obligations of any Party hereto shall cease, except
that nothing herein shall relieve any Party hereto of any liability for any and
all of the damages suffered by the other Party hereto as a result of any willful
breach of such Party’s representations, warranties covenants or agreements
contained in this Agreement; provided,  however, that Buyer’s right to pursue
legal remedies under this Agreement shall be limited to the Company Group, and
Buyer shall have no right to pursue remedies under this Agreement or otherwise
against the Seller, any officer, director or employee of the Company Group, or
any other Person individually. Notwithstanding the foregoing, the provisions of
this Section 10.2,  Section 10.3,  Section 10.4 and ARTICLE 11 shall survive any
termination of this Agreement. No termination of this Agreement shall affect the
obligations of the parties under the Confidentiality Agreement (and such
obligations shall not be limited by this Section 10.2), which shall remain in
full force and effect in accordance with the terms thereof.

 

10.3   Fees and Expenses. Except as otherwise set forth in this Agreement, each
of Buyer, the Company Group and Seller shall pay all of the costs and expenses
(including any broker’s and legal fees and expenses) that it incurs incident to
the due diligence and negotiation related to the Transactions, the preparation,
execution and delivery of this Agreement, the Transaction Documents and the
Excluded Documents and the performance of any obligations hereunder and
thereunder, whether or not the Transactions are consummated, including the
expenses and fees of its respective accountants, lawyers and other professionals
and any fees, costs and expenses associated with any financing; provided,
 however, that in the event the Transactions are consummated, the costs and
expenses (including any broker’s and legal fees and expenses) of the Company
Group and the Seller incurred in connection with this Agreement and the
Transactions shall constitute part of the Transaction Expenses.

 

10.4   Amendments and Waivers. Subject to compliance with applicable Law, any
provision hereof may be amended, modified, terminated or supplemented and the
observance of any provision hereof may be waived (either generally or in a
particular instance, and either retroactively or prospectively) by a writing
signed by Buyer and the Seller; provided, that no provision may be amended,
modified, waived or terminated by Buyer in any manner that is adverse in any
material respect to the Senior Lender without the prior written consent of the
Senior Lender. For the sake of clarity, the Parties acknowledge that nothing in
this Section 10.4 shall restrict either Party’s rights to terminate this
Agreement pursuant to the terms of Section 10.1. Any amendment, modification,
termination,

46

 

supplement or waiver effected in accordance with this Section 10.4 shall be
binding upon each of the parties hereto.

 

10.5   Failure or Indulgence Not Waiver. No waivers of, or exceptions to, any
term, condition or provision hereof, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of, or exception to,
any such term, condition or provision. No failure or delay on the part of any
Party hereto in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.

 

ARTICLE 11

GENERAL PROVISIONS

 

11.1   Notices. All notices, requests, consents, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given: (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); (c) on the date sent by e-mail of a (.pdf
or other electronic transmission) document (with confirmation of transmission)
if sent during normal business hours of the recipient, and on the next Business
Day if sent after normal business hours of the recipient; or (d) on the third
(3rd) day after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
Parties at the following addresses (or at such other address for a Party as
shall be specified in a notice given in accordance with this Section 11.1):

 

If to the Buyer or member of the Company Group after the Closing Date:

 

AdaptHealth LLC

200 West Germantown Pike, Suite 250

Plymouth Meeting, PA 19462

Telephone: (732) 719-2824

Email: luke.mcgee@adapthealth.com; cjoyce@adapthealth.com 

Attention: Luke McGee & Christopher J. Joyce

 

with a copy to (which shall not constitute notice):

 

K&L Gates LLP

1717 Main Street, Suite 2800

Dallas, TX 75201

Telephone: (214) 939-6282

Email: jill.louis@klgates.com 

Attention: Jill Louis

 

If to the Company Group (prior to the Closing Date):

 

NRE Holding Corporation

540 Lindbergh Drive

Moon Township, Allegheny, PA 15108

Telephone: (415) 983-9129

Email: Lori.schechter@mckesson.com 

Attention: General Counsel

47

 

McKesson Patient Care Solutions, Inc.

600 Lindbergh Drive

Moon Township, Allegheny, PA, 15108

Telephone: (415) 983-9129

Email: Lori.schechter@mckesson.com 

Attention: General Counsel

 

with a copy to (which shall not constitute notice):

 

Morris, Manning & Martin, LLP

1600 Atlanta Financial Center

3343 Peachtree Road, NE

Atlanta, GA 30326

Telephone: (404) 233-7000

Email: wsb@mmmlaw.com 

Attention: Ward Bondurant, Esq.

 

If to the Seller:

 

McKesson Medical-Surgical, Inc.

9954 Mayland Drive

Suite 4000

Richmond, VA 23233

Telephone: (415) 983-9129

Email: Lori.schechter@mckesson.com 

Attention: General Counsel

 

with a copy to (which shall not constitute notice):

 

Morris, Manning & Martin, LLP

1600 Atlanta Financial Center

3343 Peachtree Road, NE

Atlanta, GA 30326

Telephone: (404) 233-7000

Email: wsb@mmmlaw.com 

Attention: Ward Bondurant, Esq.

 

11.2   Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Section references herein are, unless the context otherwise
requires, references to sections of this Agreement.

 

11.3   Interpretation. When reference is made in this Agreement to an Article,
Exhibit or a Section, such reference shall be to an Article, Exhibit or Section
of this Agreement, unless otherwise indicated. The table of contents, table of
defined terms and headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the Parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any Party. To the extent
that a representation or warranty contained in ARTICLE 3 or ARTICLE 4 of this
Agreement, or any schedule, exhibit, document or item in connection therewith
furnished by the Company Group or the Seller to Buyer (each, a
“Representation”), addresses a particular subject matter with specificity (a
“Specific Representation”), and no breach under such Specific Representation
exists,

48

 

neither the Company Group nor the Seller (as applicable) shall be deemed to be
in breach of any other Representation that addresses such subject matter with
less specificity than the Specific Representation, and if such Specific
Representation is qualified or limited to the Seller’s Knowledge, materiality,
or in any other manner, no other Representation shall supersede or limit such
qualification in any manner. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” When used herein, “dollar” or “$”
means the U.S. dollar. When used herein, the word “or” means the conjunctive
“and/or” unless specified otherwise. “Made available,” “provided,” “furnished”
and words of similar import mean the posting by or on behalf of any member of
the Company Group of materials to a virtual data room managed by the Seller or
Broker and made accessible to Buyer or the Buyer Representatives, the physical
delivery by or on behalf of the Seller or the Company Group (including delivery
by email or other electronic means) of such materials to Buyer or the Buyer
Representatives, or the Seller or Company Group or its representative otherwise
making such materials available to Buyer or the Buyer Representatives for
review.

 

11.4   Severability. Whenever possible, each provision of this Agreement shall
be interpreted in a manner to be effective and valid under applicable Law, but
if one or more of the provisions of this Agreement is subsequently declared to
be invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all of the remaining conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any Party. In the event of any such declaration of invalidity, illegality or
unenforceability, this Agreement, as modified, shall be applied and construed to
reflect substantially the intent of the Parties and achieve the same economic
and legal effect as originally intended by its terms. In the event that the
scope of any provision of this Agreement is deemed unenforceable by a court of
competent jurisdiction, the Parties agree to the reduction of the scope of the
provision as the court shall deem reasonably necessary to make the provision
enforceable under the circumstances.

 

11.5   Entire Agreement. This Agreement (together with the Exhibits, Annexes,
the Seller Disclosure Schedules and other Transaction Documents) and the
Confidentiality Agreement constitute the entire agreement of the Parties with
respect to the subject matter contained herein and therein, and supersede all
prior representations, warranties, agreements and undertakings, both written and
oral, among the Parties or between any of them, with respect to the subject
matter hereof and thereof.

 

11.6   Seller Disclosure Schedules. In connection with the execution of this
Agreement, the Company delivered to Buyer the Seller Disclosure Schedules, which
may be updated prior to the Closing by the Supplemental Disclosure Schedule,
setting forth, among other things, items the disclosure of which is necessary or
appropriate either (a) in response to an express disclosure requirement
contained in a provision hereof or (b) as an exception to one or more
representations or warranties contained in ARTICLE 3 or ARTICLE 4 or to one or
more of the agreements and covenants of the Seller or the Company Group
contained in ARTICLE 6 or ARTICLE 7. The Seller Disclosure Schedules, as
supplemented by the Supplemental Disclosure Schedule, constitute an integral
part of this Agreement and is attached hereto (in the case of the Seller
Disclosure Schedules) or will be delivered prior to the Closing (in the case of
the Supplemental Disclosure Schedule) and are hereby incorporated herein. There
may be included in the Seller Disclosure Schedules, as supplemented by the
Supplemental Disclosure Schedule, and elsewhere in this Agreement items and
information that are not “material,” and such inclusion will not be deemed to be
an acknowledgment or agreement that any such item or information (or any non-
disclosed item or information of comparable or greater significance) is
“material” and will not be used as

49

 

a basis for interpreting the terms “material,” “materially,” “materiality,”
Company Material Adverse Effect or any word or phrase of similar import used
herein. Matters reflected in the Seller Disclosure Schedules, as supplemented by
the Supplemental Disclosure Schedule, are not necessarily limited to matters
required by this Agreement to be disclosed in the Seller Disclosure Schedules.
No disclosure in the Seller Disclosure Schedules, as supplemented by the
Supplemental Disclosure Schedule, relating to a possible breach or violation of
any Contract, law or order of any Governmental Authority will be construed as an
admission or indication that such breach or violation exists or has occurred.
Any disclosures in the Seller Disclosure Schedules, as supplemented by the
Supplemental Disclosure Schedule, that refer to a document are qualified in
their entirety by reference to the text of such document, including all
amendments, exhibits, schedules and other attachments thereto. Any capitalized
term used  in the Seller Disclosure Schedules, as supplemented by the
Supplemental Disclosure Schedule, and not otherwise defined therein has the
meaning given to such term in this Agreement. Any headings set forth in the
Seller Disclosure Schedules, as supplemented by the Supplemental Disclosure
Schedule, are for convenience of reference only and do not affect the meaning or
interpretation of any of the disclosures set forth in the Seller Disclosure
Schedules. The disclosure of any matter in any section of the Seller Disclosure
Schedules, as supplemented by the Supplemental Disclosure Schedule, will be
deemed to be a disclosure by the Seller to each other section of the Seller
Disclosure Schedules to which such disclosure’s relevance is reasonably apparent
on its face. The listing of any matter on the Seller Disclosure Schedules, as
supplemented by the Supplemental Disclosure Schedule, shall expressly not be
deemed to constitute an admission by such Party, or to otherwise imply, that any
such matter is material, is required to be disclosed by such Party under this
Agreement or falls within relevant minimum thresholds or materiality standards
set forth in this Agreement. In no event shall the listing of any matter in the
Seller Disclosure Schedules, as supplemented by the Supplemental Disclosure
Schedule, be deemed or interpreted to expand the scope of such the
representations, warranties or covenants of the Seller or the Company Group as
set forth in this Agreement.

 

11.7   Assignment. No Party hereto may assign any of its rights or obligations
hereunder without the prior written consent of Buyer and the Seller; provided
that the Buyer may assign this Agreement or any of its rights or obligations
hereunder, upon notice to the Seller, to any Affiliate of the Buyer provided
that the Buyer shall remain liable for the performance of any obligations
hereunder; provided, further, that nothing in this Agreement shall or is
intended to limit the ability of the Buyer to assign its rights or delegate its
responsibilities, liabilities and obligations under this Agreement, in whole or
in part, without the consent of the Seller to any lender to the Buyer (together
with any successors and assigns, individually and collectively, “Senior Lender”)
as security for borrowings. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Any assignment in violation of this Section 11.7 will be null and void
(except for any assignment hereof by Buyer to the Senior Lender).
Notwithstanding anything to the contrary in this Agreement, (x) any Senior
Lender is an intended third party beneficiary of Sections 10.4,  11.4 and 11.10
and Sections 10.4 and 11.10 may be enforced by such persons directly, and (y)
Sections 10.4,  11.4 and 11.10 may not be amended, modified, waiver or
terminated in a manner that is adverse in any material respect to the Senior
Lender without the prior written consent of such Senior Lender

 

11.8   Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each Party hereto and their successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement (except as provided in Sections
7.8 and 11.7, with respect to which the Persons identified in such Section shall
be third party beneficiaries).

50

 

11.9   Specific Performance.

 

(a)         Each of the Parties acknowledges and agrees that the other Parties
would be irreparably damaged immediately, extensively and irreparably and no
adequate remedy at Law would exist in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached or violated. Accordingly, in addition to, and not in
limitation of, any other remedy available to any party at Law or in equity, the
Parties hereby acknowledge and agree that Buyer, the Company Group (prior to the
Closing) and the Seller shall be entitled to an injunction or injunctions to
prevent any breaches or violations of the provisions of this Agreement and to
the remedy of specific performance of this Agreement and the terms and
provisions hereof, including to cause the transactions contemplated by this
Agreement to be consummated on the terms and subject to the conditions set forth
in this Agreement. Each of the Parties hereby waive, and agree not to assert, to
the fullest extent permitted by Law, (i) any defense that a remedy of injunctive
relief or specific performance is unenforceable, invalid, contrary to law or
inequitable for any reason, (ii) any defense in any action for injunctive relief
or specific performance, including the defense that a remedy at law would be
adequate or that monetary damages would provide an adequate remedy, (iii) any
requirement under any Law to post bond or other security as a prerequisite to
obtaining equitable relief and (iv) any defense that injunctive relief or
specific performance will cause an undue hardship to any party.

 

(b)         If any Party brings any action to specifically enforce the terms and
provisions of this Agreement, the Outside Date shall automatically be extended
by (i) the amount of time during which such action is pending, plus twenty (20)
Business Days or (ii) such later date established by the Delaware Court
presiding over such action. The Parties further agree that (A) by seeking the
remedies provided for in this Section 11.9, no Party shall in any respect waive
its right to seek at any time any other form of relief that may be available to
it under this Agreement or any other agreement or document entered into in
connection herewith or the transactions contemplated hereby (including monetary
damages) in the event that this Agreement has been terminated or the remedies
provided for in this Section 11.9 are not available, dismissed or otherwise not
granted, and (Z) nothing set forth in this Section 11.9 shall require any Party
to institute any proceeding for (or limit any Party’s right to institute any
proceeding for)  specific performance under this Section 11.9 prior to or as a
condition to exercising any termination right under ARTICLE 10, nor shall the
commencement of any Legal Proceeding pursuant to this Section 11.9 or anything
set forth in this Section 11.9 restrict or limit any Party’s right to terminate
this Agreement in accordance with the terms of ARTICLE 10 or pursue any other
remedies under this Agreement any other agreement or document entered into in
connection herewith or the transactions contemplated hereby that may be
available then or thereafter.

 

11.10 Governing Law; Exclusive Jurisdiction.

 

(a)         This Agreement, and all claims or causes of actions (whether at Law,
in contract or in tort) that may be based upon, arise out of or are related to
this Agreement or the negotiation, execution or performance of this Agreement,
shall be governed by, and construed in accordance with, the Laws of the State of
Delaware, without giving effect to conflicts of laws principles (whether of the
State of Delaware or any other jurisdiction that would cause the application of
the Laws of any jurisdiction other than the State of Delaware).

 

(b)         Any claim, action, suit, arbitration, alternative dispute resolution
action or any other judicial or administrative proceeding, in Law or equity
(each, a “Legal Proceeding”) arising out of or relating to this Agreement and
any related agreement, certificate or other document delivered in connection
herewith shall be heard and determined by the Court of Chancery of the State of
Delaware and any state appellate court therefrom within the State of Delaware
(unless the Court of Chancery of the State of Delaware declines to accept
jurisdiction over a particular matter, in which case, in any federal

51

 

court within the State of Delaware and any federal appellate court therefrom)
(together, the “Delaware Courts”). Each of the Parties hereby irrevocably and
unconditionally: (i) submit to the exclusive jurisdiction of the Delaware
Courts, for the purpose of any Legal Proceeding arising out of or relating to
this Agreement and any related agreement, certificate or other document
delivered in connection herewith brought by any Party hereto; (ii) agree not to
commence any such action or proceeding except in such courts; (iii) agree that
any claim in respect of any such action or proceeding may be heard and
determined in any Delaware Court; (iv) waive, and agree not to assert, to the
fullest extent it may legally and effectively do so, any objection or defense
that it may now or hereafter have to the laying of venue of any such action or
proceeding in any Delaware Court, (v) waive, and agree not to assert, to the
fullest extent it may legally and effectively do so, any objection or defense
that it is not subject to such jurisdiction or that such action or proceeding
may not be brought, is not maintainable in or may not be enforced in or by such
courts; and (vi) waive, and agree not to assert, to the fullest extent it may
legally and effectively do so, any objection or defense of an inconvenient forum
to the maintenance of such action or proceeding in any Delaware Court. Each of
the Parties agrees that a final judgment in any such action or proceeding
shall  be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law. Each Party irrevocably and
unconditionally consents to service of process in the manners provided for
notices in Section 11.1;  provided, that nothing in this Agreement shall affect
the right of any Party to serve process in any other manner permitted by Law.

 

(c)         EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION, DIRECTLY OR
INDIRECTLY, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY RELATED
AGREEMENT, CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH. EACH
PARTY ACKNOWLEDGES AND AGREES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER;
(II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER;
(III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (IV) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 11.10.

 

(d)         Each Party irrevocably and unconditionally consents to service of
process in person or by certified or by nationally recognized overnight courier
to its respective notice address set forth in Section 11.1, which shall
constitute valid in personal service upon such Party and its successors and
assigns in any proceeding commenced pursuant to this Section 11.10;  provided,
that, notwithstanding the foregoing, nothing in this Agreement shall affect the
right of any Party to serve process in any other manner permitted by Law. Each
Party acknowledges and agrees that: (i) this is a commercial transaction;

(ii) the foregoing provisions for service of process and waiver of jury trial
have been read, understood and voluntarily agreed to by such Party; and (iii)
each Party is hereby waiving important legal rights.

 

11.11 Counterparts. This Agreement may be executed manually or by facsimile or
email delivery by the Parties, in any number of counterparts, each of which
shall be considered an original, and all of which together shall be considered
one and the same agreement. The Agreement shall become effective when each of
Buyer, the members of the Company Group and the Seller have executed this
Agreement.

 

11.12 Waiver of Conflicts Regarding Representation. Morris, Manning &
Martin,  LLP (“MMM”) has acted as counsel for the Company Group (prior to the
Closing Date) and the Seller (collectively, the “Company Parties”) in connection
with this Agreement and the transactions contemplated hereby (the “Acquisition
Engagement”) and, in that connection, not as counsel for any other Person,
including, without limitation, Buyer or any of its Affiliates (including the
Company Group, from

52

 

and after the Closing Date). Only the Company Parties shall be considered
clients of MMM in the Acquisition Engagement. If the Seller so desires, MMM
shall be permitted, without the need for any future waiver or consent, to
represent any of the Seller or the Seller Indemnified Parties from and after the
Closing in connection with any matter related to the matters contemplated by
this Agreement, the Transaction Documents, the Excluded Documents any other
agreements referenced herein or therein or any disagreement or dispute relating
thereto and may in connection therewith represent the agents or Affiliates of
the Seller or the Seller Indemnified Parties, in any of the foregoing cases
including in any dispute, litigation or other adversary proceeding against, with
or involving the Company Group (from and after the Closing Date) or any of their
agents or Affiliates (in such capacity). To the extent that communications
between a Company Party, on the one hand, and MMM, on the other hand, relate to
the Acquisition Engagement and such communications are protected by the
attorney-client privilege as between MMM and the Company Parties, including the
Company Group prior to the Effective Time and all attorney work product prepared
in connection with the Acquisition Engagement (such communications,
collectively, the “Attorney-Client Communications”), such Attorney-Client
Communications shall be deemed to belong solely to the Seller, and not Buyer or
the Company Group (from and after the Closing Date). Buyer acknowledges and
agrees, for itself and on behalf of its Affiliates, including the Company Group
(from and after the Closing), upon and after the Closing: (a) the Seller, for
and on behalf of the Seller Indemnified Parties, and MMM shall be the sole
holders of the attorney-client privilege and work product privilege with respect
to the Acquisition Engagement, and none of Buyer nor any of its Affiliates,
including the Company Group from and after the Closing Date, shall be a holder
thereof; and (b) MMM shall have no duty whatsoever to reveal or disclose any
Attorney- Client Communications to Buyer or any of its Affiliates, including the
Company Group from and after the Closing Date, by reason of any attorney-client
relationship between MMM and the Company Group or otherwise.

 

* * * * *

 

[Signature page follows.]

 

 

53

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Securities Purchase
Agreement as of the date first written above.

 

 

 

BUYER:

 

 

 

ADAPTHEALTH LLC

 

 

 

 

 

By:

/s/ Luke McGee

 

Name:

Luke McGee

 

Its:

Chief Executive Officer

 

 

 

SELLER:

 

 

 

MCKESSON MEDICAL-SURGICAL, INC.

 

 

 

 

 

By:

/s/ Bansi Nagji

 

Name:

Bansi Nagji

 

Its:

Authorized Representative

 

 

 

COMPANY GROUP:

 

 

 

NRE HOLDING CORPORATION

 

 

 

 

 

By:

/s/ Bansi Nagji

 

Name:

Bansi Nagji

 

Its:

Authorized Representative

 

 

 

MCKESSON PATIENT CARE SOLUTIONS, INC.

 

 

 

 

 

By:

/s/ Bansi Nagji

 

Name:

Bansi Nagji

 

Its:

Authorized Representative

 

[Signature Page to Securities Purchase Agreement]