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Exhibit 10.40

 

STOCK PURCHASE AGREEMENT

by and among

MEDICALOGIC/MEDSCAPE, INC.,

MEDSCAPE ENTERPRISES, INC.

and

TEM HOLDINGS, LLC

 

 

Dated as of July 31, 2001

 

 

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TABLE OF CONTENTS

ARTICLE I SALE AND TRANSFER OF SHARES; PURCHASE PRICE; CLOSING; PURCHASE PRICE
ADJUSTMENT     Section 1.01 Sale and Transfer of Shares; Purchase Price  
Section 1.02 Delivery of Shares and Payment of Purchase Price   Section 1.03
Closing       ARTICLE II REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY, THE
SELLER AND THE SHARES     Section 2.01 Organization, Qualifications and
Corporate Power; Subsidiaries   Section 2.02 Authorization of Agreements, Etc.  
Section 2.03 Validity   Section 2.04 Capitalization of the Company   Section
2.05 Financial Statements   Section 2.06 Absence of Undisclosed Liabilities  
Section 2.07 Absence of Certain Changes or Events   Section 2.08 Governmental
Approvals   Section 2.09 Title to Properties, Absence of Liens and Encumbrances
  Section 2.10 Intellectual Property   Section 2.11 Status of Contracts  
Section 2.12 Litigation, Etc.   Section 2.13 Taxes   Section 2.14 Governmental
Authorizations and Regulations   Section 2.15 Labor Matters   Section 2.16
Insurance   Section 2.17 Employee Benefit Plans   Section 2.18 Related Party
Transactions   Section 2.19 Brokers’ or Finders’ Fees       ARTICLE III
REPRESENTATIONS AND WARRANTIES AS TO THE PARENT     Section 3.01 Organization
and Corporate Power; Ownership of the Seller; Authorization of Agreements, Etc.
  Section 3.02 Validity   Section 3.03 Governmental Approvals   Section 3.04
Litigation Relating to the Transactions Contemplated Hereby       ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER     Section 4.01 Power and
Authority   Section 4.02 Authorization of Agreements, Etc.   Section 4.03
Validity   Section 4.04 Governmental Approvals   Section 4.05 Litigation
Relating to the Transactions Contemplated Hereby   Section 4.06 Brokers’ or
Finders’ Fees   Section 4.07 Purchase for Investment

 

 

ARTICLE V COVENANTS     Section 5.01 Certain Covenants of the Parent and the
Seller   Section 5.02 Books and Records   Section 5.03 Certain Tax Matters      
ARTICLE VI CONDITIONS PRECEDENT     Section 6.01 Conditions Precedent to the
Obligations of the Purchaser   Section 6.02 Conditions Precedent to the
Obligations of the Seller       ARTICLE VII Survival     Section 7.01 Survival
of Representations and Warranties       ARTICLE VIII TERMINATION OF AGREEMENT  
  Section 8.01 Termination of Agreement Prior to Closing   Section 8.02 Method
and Effect of Termination   Section 8.03 Termination Fees       ARTICLE IX
MISCELLANEOUS     Section 9.01 Specific Performance   Section 9.02 Expenses,
Etc.   Section 9.03 Execution in Counterparts   Section 9.04 Notices   Section
9.05 Waivers   Section 9.06 Amendments, Supplements, Etc.   Section 9.07 Entire
Agreement   Section 9.08 Applicable Law; Consent to Jurisdiction   Section 9.09
Further Assurances   Section 9.10 Interpretation   Section 9.11 Binding Effect;
Benefits   Section 9.12 Assignability

INDEX TO EXHIBITS AND SCHEDULES

Schedule Description

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    2.01(c) Subsidiaries 2.07 Absence of Certain Events 2.07(A) Affiliates of
Parent and Seller 2.10 Real Property 2.11 Intellectual Property 2.12 Status of
Contracts 2.15 Customers 2.16 Litigation 2.17 Tax Matters 2.18 Permits 2.19
Labor Matters 2.20 Insurance 2.21 Employee Benefit Plans 2.23 Related Party
Transactions 2.24 Bank Accounts         Exhibit Description

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    6.01(i) Escrow Agreement 6.01(j) Transition Services Agreement 6.01(k)
Opinion of Stoel Rives LLP

 

INDEX TO DEFINED TERMS

THIS INDEX IS INCLUDED FOR CONVENIENCE ONLY
AND DOES NOT CONSTITUTE A PART OF THE AGREEMENT

Term Reference

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    “Affiliate” 2.07 “Ancillary Agreements” 2.02(a) “Balance Sheet” 2.05
“Balance Sheet Date” 2.05 “Claims” 7.05 “Closing” 1.03 “Closing Date” 1.03
“Code” 2.13(d) “Company” Recitals “Company Common Stock” Recitals “Contracts”
2.11 “Damages” 7.03 “Employee Benefit Plans” 2.17 “Expenses” 9.02(a) “Financial
Statements” 2.05 “GAAP” 2.05 “Intellectual Property Rights” 2.10 “Liens” 2.01(g)
“Marks” 5.06(a) “Material Adverse Effect” 2.07 “Non-Solicitation Agreement” 8.02
“Parent” Recitals “Permitted Cash Distribution” 5.01(d) “Permitted Liens” 2.09
“Person” 2.11(c) “Purchase Price” 1.01(b) “Purchaser” Recitals “Related Party”
2.18 “Returns” 2.13(a) “Seller” Recitals “Shares” Recitals “Subsidiary” 2.01(h)
“Taxes” 2.13(a) “Taxing Authorities” 2.13(a) “Third Party Claims” 7.05(a)(A)

STOCK PURCHASE AGREEMENT

             STOCK PURCHASE AGREEMENT dated as of July 31, 2001 by and among
MEDICALOGIC/MEDSCAPE, INC., an Oregon corporation (the “Parent”), MEDSCAPE
ENTERPRISES, INC., a Delaware corporation and wholly-owned subsidiary of the
Parent (the “Seller”), and TEM Holdings, LLC, a Delaware limited liability
company (the “Purchaser”).

W I T N E S S E T H:

             WHEREAS, the Seller owns all of the issued and outstanding shares
of capital stock of Total eMed, Inc., a Delaware corporation (the “Company”),
consisting of 100 shares of Common Stock, par value $.01 per share (“Company
Common Stock”); and

             WHEREAS, on the terms and subject to the conditions hereinafter set
forth, the Seller desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Seller, all 100 issued and outstanding shares of Company
Common Stock (the “Shares”);

             NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I
SALE AND TRANSFER OF SHARES; PURCHASE PRICE;
CLOSING; PURCHASE PRICE ADJUSTMENT

             Section 1.01     Sale and Transfer of Shares; Purchase Price.

                           (a)         In reliance upon the representations and
warranties contained herein, and subject to the terms and conditions set forth
herein, the Seller shall sell and transfer to the Purchaser, and the Purchaser
shall purchase from the Seller, on the Closing Date (as hereinafter defined),
all of the Shares.

                           (b)        The purchase price for the Shares (the
“Purchase Price”) shall be $60,000 per Share, or $6,000,000 in the aggregate.

                           (c)         The portion of the Purchase Price to be
put into escrow (the “Escrow Amount”) shall be $1,000,000.

                           (d)        “Closing Debt” means the aggregate
outstanding indebtedness for borrowed money (including any intercompany
receivables owed by the Company or the Subsidiaries (as hereafter defined) to
the Seller, Parent or any of their affiliates) and the deferred purchase price
of property of the Company and the Subsidiaries as of immediately prior to the
Closing (but not including any capital leases or other deferred purchase price
of property set forth on Schedule 2.12 hereto), including all principal,
interest, prepayment fees and other amounts required to be paid in order to
discharge fully all such amounts at Closing.

                           (e)         At least two days prior to the Closing,
the Seller shall furnish to the Purchaser (i) wire transfer instructions for the
Purchase Price (less the Escrow Amount), (ii) wire transfer instructions from
the Escrow Agent for the Escrow Amount and (iii) evidence satisfactory to the
Purchaser of payment or release of all Closing Debt, including, in the case of
intercompany debt from the Seller, Parent or an affiliate, evidence of the
contribution to capital of the Company of all such amounts.

             Section 1.02     Delivery of Shares and Payment of Purchase Price.

                           (a)         On the Closing Date, against delivery of
the Purchase Price, the Seller shall deliver to the Purchaser one or more
certificates in definitive form, registered in the name of the Purchaser,
evidencing the Shares being purchased by the Purchaser hereunder, duly endorsed
for transfer or accompanied by a stock transfer power duly endorsed in blank.

                           (b)        On the Closing Date, against delivery of
the certificates evidencing the Shares as aforesaid, the Purchaser shall pay, by
wire transfer of immediately available funds in accordance with the wire
transfer instructions referenced above, (i) the Purchase Price (less the Escrow
Amount) to the Seller and (ii) the Escrow Amount to the Escrow Agent.

             Section 1.03     Closing.  The closing of the sale and transfer of
the Shares pursuant to Sections 1.01 and 1.02 above (the “Closing”) shall take
place at the offices of Choate, Hall & Stewart, Exchange Place, 53 State Street,
Boston, Massachusetts 02109, or at such other location as the parties mutually
agree, at 10:00 (EST) on the second business day following the satisfaction or
waiver of all of the conditions set forth in Article VI of this Agreement (other
than those conditions that by their nature are to be satisfied at such Closing,
subject to the fulfillment or waiver of such conditions at such Closing), or at
such other time and on such other date as the parties mutually agree (such date
and time of Closing being herein called the “Closing Date”).  The Closing shall
be deemed to be effective for tax and accounting purposes as of the close of
business on the Closing Date.

ARTICLE II
REPRESENTATIONS AND WARRANTIES
AS TO THE COMPANY, THE SELLER AND THE SHARES

             The Parent and the Seller hereby jointly and severally represent
and warrant to the Purchaser that each of the statements contained in this
Article II is true and correct and will be true and correct as of the Closing
Date:

             Section 2.01     Organization, Qualifications and Corporate Power;
subsidiaries.

                           (a)         Each of the Seller and the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  The Company is duly licensed or qualified as a
foreign corporation to do business, and is in good standing, in each other
jurisdiction in which the failure to be so licensed or qualified has had or
could reasonably be expected to have a Material Adverse Effect.  Each of the
Seller and the Company has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as
currently conducted and as currently proposed by the Seller and the Company to
be conducted.

                           (b)        The Seller has previously made available
to the Purchaser or its counsel complete and correct copies of the Certificate
of Incorporation and Bylaws of the Company, each as in effect on the date hereof
and which shall be in effect on the Closing Date.  The Company is not in default
in the performance, observance or fulfillment of any provision of its
Certificate of Incorporation or Bylaws.

                           (c)         Except as set forth on Schedule 2.01(c),
the Company has no subsidiaries.  The entities indicated on such Schedule as
subsidiaries are referred to herein as the “Subsidiaries” and each as a
“Subsidiary”.  Except as set forth on Schedule 2.01(c), neither the Company nor
any of the Subsidiaries directly or indirectly owns or has the right or
obligation to acquire any equity interest, or any security convertible or
exchangeable into any equity interest, in any other corporation, partnership,
limited liability company, joint venture, trust or other business enterprise,
except in the ordinary course of business and except for the interests of the
Company in the Subsidiaries.  Neither the Company nor any Subsidiary is subject
to any obligation or requirement to make any investment (in the form of a loan
or capital contribution) in any corporation, partnership, limited liability
company, joint venture, trust or other business enterprise.

                           (d)        Schedule 2.01(c) sets forth the name and
jurisdiction of organization of each Subsidiary.  There are no authorized or
outstanding subscriptions, warrants, options, convertible or exchangeable
securities or other rights (contingent or other) to purchase or acquire any
shares of any class of capital stock (or membership interests) of any of the
Subsidiaries or commitments of any such Subsidiary (contingent or other) to
issue any shares of capital stock or membership interests or any subscriptions,
warrants, options, convertible securities or other rights in respect thereof.

                           (e)         Each Subsidiary is a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
corporate (or comparable) power and authority to own or lease and operate its
properties and assets and to carry on its business as currently conducted and as
currently proposed by the Company to be conducted.  Each Subsidiary is duly
licensed or qualified as a foreign corporation or limited liability company to
do business, and is in good standing, in each other jurisdiction in which the
failure to be so licensed or qualified has had or could reasonably be expected
to have a Material Adverse Effect.

                           (f)         The Seller has previously made available
to the Purchaser or its counsel complete and correct copies of the Certificates
or Articles of Incorporation and Bylaws (or comparable governing documents) of
each of the Subsidiaries, each as in effect on the date hereof and which shall
be in effect on the Closing Date.  No Subsidiary is in default in the
performance, observance or fulfillment of any provision of such governing
documents.

                           (g)        All of the outstanding shares of capital
stock or membership interests, as applicable, of each Subsidiary are validly
issued, fully paid and nonassessable and are owned beneficially and of record by
the Company or by a wholly-owned Subsidiary as set forth on Schedule 2.01(c),
free and clear of any liens, pledges, security interests, mortgages, charges or
other encumbrances or adverse claims (“Liens”), and there are no proxies
outstanding or restrictions on voting with respect to any such shares.  None of
such shares or membership interests are subject to, nor were any of them issued
in violation of, any preemptive rights or any right of first refusal, right of
first offer or other similar right in favor of any person.

             Section 2.02     Authorization of Agreements, Etc.

                           (a)         The Seller has all requisite corporate
power and authority to execute and deliver this Agreement and all related
documents, certificates, instruments and agreements to be delivered at Closing
or otherwise in connection with this Agreement to which it is a party
(collectively, the “Ancillary Agreements”), and to perform its obligations
hereunder and thereunder.

                           (b)        The execution, delivery and performance of
this Agreement by the Seller and the Parent, including the sale and transfer of
the Shares hereunder, and of the Ancillary Agreements to which they are a party
have been duly authorized by all requisite corporate action on the part of the
Seller and the Parent (including all requisite action of the Board of Directors
of the Seller and of the Parent, as the sole stockholder of the Seller). 
Neither the execution and delivery by the Parent and the Seller of this
Agreement and the Ancillary Agreements to which they are party nor the
performance by the Parent and the Seller of their respective obligations
hereunder and thereunder, including the sale and transfer of the Shares
hereunder, will (A) violate (i) any provision of law or any governmental
regulation or order of any court or other agency of government that is
applicable to the Seller, the Company or any Subsidiary, (ii) the Certificate or
Articles of Incorporation or Bylaws (or equivalent governing document of each
noncorporate Subsidiary) of the Seller, the Parent, the Company or any
Subsidiary, or (iii) any judgment, award or decree applicable to the Seller, the
Parent, the Company or any Subsidiary, or (B) cause a material default, breach
or penalty under any Material Contract or under any material contract,
indenture, agreement or note to which the Seller or the Parent is a party, or
(D) result in the creation or imposition of any Lien upon any of the properties
or assets of the Seller, the Company or any Subsidiary, or (E) result in any
suspension, revocation, impairment, forfeiture or nonrenewal of any Permit (as
hereinafter defined) of the Company or any Subsidiary.

             Section 2.03     Validity.  This Agreement has been duly executed
and delivered by the Seller and constitutes, and each of the Ancillary
Agreements to which the Seller is to be a party, when executed and delivered by
the Seller as contemplated hereby, will constitute, the legal, valid and binding
obligation of the Seller, enforceable against it in accordance with their
respective terms.

             Section 2.04     Capitalization of the Company.

                           (a)         The authorized capital stock of the
Company consists of 100 shares of Company Common Stock, all of which are validly
issued and outstanding, fully paid and nonassessable and owned beneficially and
of record by the Seller free and clear of all Liens and adverse claims.  The
Seller has good and marketable title to the Shares.  Upon the delivery by the
Seller of certificates evidencing the Shares, duly endorsed for transfer or
accompanied by stock transfer powers duly endorsed in blank, to the Purchaser
pursuant to Section 1.02(a) above, against payment of the Purchase Price as
provided in Section 1.02(b) above, the Seller will transfer good and marketable
title to said Shares to the Purchaser, free and clear of any and all Liens or
adverse claims.  None of the Shares are subject to, nor were any of them issued
in violation of, any preemptive rights or any right of first refusal, right of
first offer or other similar right in favor of any person.

                           (b)        (i) No subscription, warrant, option,
convertible security or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of the Company is authorized or
outstanding, (ii) there is not any commitment (contingent or other) of the
Company to issue any shares, warrants, options or other such rights or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets, (iii) the Company has no obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of the capital stock
of the Company or any Subsidiary or any interest therein or to pay any dividend
or make any other distribution in respect thereof and (iv) there is not any
agreement (contingent or other) relating to the voting, transfer or registration
under any securities laws of any shares of any class of capital stock of the
Company or any Subsidiary nor any outstanding proxies with respect thereto.

             Section 2.05     Financial Statements.  The Parent and the Seller
have previously delivered to the Purchaser (i) the unaudited consolidated
balance sheet of the Company (the “Balance Sheet”) as of December 31, 2000 (the
“Balance Sheet Date”) and the related unaudited consolidated statements of
operations, changes in stockholders’ equity (deficit) and cash flows for the
year then ended, (ii) the audited consolidated balance sheet of the Company as
of December 31, 1999 and the related audited consolidated statements of
operations, changes in stockholders’ equity (deficit) and cash flows for the
year then ended, together with the report thereon of Arthur Andersen LLP, the
Company’s independent certified public accountants for the year then ended,
(iii) the audited consolidated balance sheet of the Company as of December 31,
1998 and the related audited consolidated statements of operations, changes in
stockholders’ equity (deficit) and cash flows for the period from March 4, 1998
(inception) through December 31, 1998, together with the report thereon of
Arthur Andersen LLP, the Company’s independent certified public accountants for
the period then ended, and (iv) the unaudited consolidated balance sheet of the
Company as of June 30, 2001 and the related unaudited consolidated statements of
operations, changes in stockholders’ equity (deficit) and cash flows for the six
month period then ended, certified by the principal financial officer of the
Company (collectively, the “Financial Statements”).  The Financial Statements
(i) were prepared in accordance with United States generally accepted accounting
principals, applied on a consistent basis in accordance with the Company’s
historical methods, policies, practices, estimations and judgments (“GAAP”),
from the books and records of the Company and its Subsidiaries and (ii) fairly
present the financial position of the Company and its Subsidiaries as of the
respective dates specified therein and the results of operations, shareholders’
equity (deficit) and cash flows for the respective periods then ended (subject
to, in the case of the Financial Statements referred to in (iv) above, normal,
nonmaterial year-end adjustments).

             Section 2.06     Absence of Undisclosed Liabilities.  Except as and
to the extent reflected or reserved against in the Balance Sheet, or incurred
since the Balance Sheet Date in the ordinary course of business and consistent
with past practice, the Company and its Subsidiaries have no material
liabilities, debts or obligations of any kind or nature whatsoever (whether
fixed, absolute, accrued, contingent, secured or unsecured, known or unknown or
otherwise, and whether due or to become due), including, without limitation, any
tax liabilities due or to become due, or whether incurred in respect of or
measured by the assets, sales, income or receipts of the Company and its
Subsidiaries for any period.

             Section 2.07     Absence of Certain Changes or Events.  (a)   Since
June 30, 2001, other than as shown on Schedule 2.07, the Company and each
Subsidiary has operated only in the usual and ordinary course (and consistent
with the provisions of Section 5.01(a)(i-v), and there has been no
(i) acquisition or disposition of assets or securities, or commitment therefor
by the Company or any Subsidiary, except in the ordinary course of business,
(ii) liens, security interests or encumbrances placed upon any of the Company’s
or any Subsidiary’s assets, except in the ordinary course of business, (iii)
increase in the compensation or commission rates payable by the Company or any
Subsidiary to any officer, director, employee with annual compensation of at
least $70,000, (iv) except for the Permitted Cash Distribution,  dividend,
distribution, redemption, recapitalization or other transaction involving the
capital stock of the Company or any Subsidiary or non-cash distribution or
payment to any of the Parent, the Seller or their Affiliates or (v) other event
or condition which has had or could reasonably be expected to have a material
adverse effect on the business as currently conducted, assets, liabilities,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole (a “Material Adverse Effect”).  As used in this
Agreement, “Affiliate” means the direct and indirect majority-owned subsidiaries
of Parent other than the Company and the Subsidiaries, all of which are listed
on Schedule 2.07(A).

             Section 2.08     Governmental Approvals.  No order, authorization,
approval or consent from, or filing with, any federal or state governmental or
public body, non-governmental self-regulatory or standard-setting authorities or
other authority having jurisdiction over the Seller, the Company or any
Subsidiary is required for the execution, delivery and performance by the Parent
and/or the Seller of this Agreement or any of the Ancillary Agreements to which
either the Parent or the Seller is a party, is necessary in order to ensure the
legality, validity, binding effect or enforceability against the Parent or the
Seller of this Agreement or any such Ancillary Agreement, or is necessary in
order that the business of the Company and its Subsidiaries can be conducted
following the Closing Date substantially in the same manner as heretofore
conducted.

             Section 2.09     Title to Properties, Absence of Liens and
Encumbrances.  The Company and each Subsidiary has good and marketable title to,
or a valid leasehold or license interest in, all assets and properties used by
it in connection with its business (including good and marketable title to all
assets reflected on the Balance Sheet, except for accounts receivable collected
in the ordinary course since the Balance Sheet Date), in each case free and
clear of all Liens other than (x) liens for taxes not yet due and payable, (y)
imperfections of title that do not detract from the value or impair the use of
the property subject thereto and (z) materialmen’s, mechanics’, and other like
liens arising in the ordinary course of business and for which related payments
are not past due (the Liens described in clauses (x), (y) and (z) above being
referred to herein as “Permitted Liens”).  All material assets of the Company
and each Subsidiary are in good operating condition and repair, normal wear and
tear excepted.  The assets and properties of the Company and each Subsidiary
include all assets currently used in the conduct of their businesses and are
adequate to conduct the operations of the Company and the Subsidiaries.

             Section 2.10     Real Property.  Neither the Company nor any
Subsidiary owns any real property.  Schedule 2.10 sets forth each interest in
real property leased by the Company or any Subsidiary, the lessor of such leased
property, the annual rent payable by the Company or any Subsidiary in respect of
such leased property, and each lease or any other arrangement under which such
property is leased.  To the knowledge of Parent, Seller and the Company (and,
for all purposes hereunder, the knowledge of the Parent, Seller and/or the
Company shall include the knowledge of each of the Subsidiaries), the Company or
any Subsidiary, as applicable, enjoys peaceful and quiet possession of its
leased premises and is not in material default under any such leasehold, and
neither the Company nor any Subsidiary has been informed that the lessor under
any of the leases has taken action or threatened to terminate the lease before
the expiration date specified in the lease.  There is no pending nor, to the
knowledge of Parent, Seller or the Company, threatened condemnation, eminent
domain or similar proceeding with respect to any real property occupied by the
Company or any Subsidiary.  All real property leased by the Company or any
Subsidiary is in compliance in all material respects with all building, zoning,
subdivision, health, safety and other applicable foreign, federal, state and
local laws and regulations.

             Section 2.11     Intellectual Property.(a)            As used
herein “Intellectual Property” means all (i) patents, patent applications,
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names, logos and corporate names (in each case, whether registered or
unregistered) and registrations and applications for registration thereof
together, to the extent applicable, with all of the goodwill associated
therewith, (iii) copyrights (registered or unregistered) and copyrightable works
and registrations and applications for registration thereof, (iv) computer
software, data, data bases and documentation thereof, (v) trade secrets and
other confidential information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial and
marketing plans and customer and supplier lists and information), and (vi)
domain name registrations.  As used herein “Company Intellectual Property” means
Intellectual Property owned or used by the Company or any Subsidiary for the
conduct of its current business.

                           (b)        Schedule 2.11 hereto contains a complete
and accurate list of all Company Intellectual Property included in clauses (i) –
(iii) of the definition of Intellectual Property.  Schedule 2.11 also contains a
complete and accurate list of all material licenses and other rights granted by
the Company or any Subsidiary to any third party with respect to any Company
Intellectual Property and all material licenses and other rights granted by any
third party to the Company or any Subsidiary with respect to any Company
Intellectual Property (excluding “off-the-shelf” programs or products or other
software licensed in the ordinary course of business) identifying the subject
Intellectual Property.  To the knowledge of Parent, Seller and the Company,
there is no reasonably foreseeable loss or expiration of any material Company
Intellectual Property.  The Company and each Subsidiary has taken commercially
reasonable and appropriate actions to maintain and protect the Company
Intellectual Property.

                           (c)         To the knowledge of Parent, Seller and
the Company:  (i) the Company and each Subsidiary own or possess sufficient
legal rights to all Company Intellectual Property used in its business as now
conducted, without any infringement of the rights of others; (ii) neither the
Company nor any Subsidiary has violated or is violating or infringing any
Intellectual Property of any other natural person, corporation, limited
liability company, partnership, trust or other entity (each, a “Person”), (iii)
no Person has violated or is violating or infringing any Company Intellectual
Property and (iv) no employee of the Company or any Subsidiary is obligated
under any agreement or commitment, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with such employee’s
duties to the Company or any Subsidiary or that would conflict with any of their
businesses as now conducted and as currently proposed to be conducted.

             Section 2.12     Status of Contracts.  Schedule 2.12 sets forth a
complete and accurate list of all:

                           (a)         contracts with respect to which the
Company or any Subsidiary has any liability or obligation involving more than
$50,000, contingent or otherwise, or which may extend for a term of more than
one year after the Closing;

                           (b)        material contracts under which the amount
payable by the Company or any Subsidiary is calculated based on the revenue,
income or similar measure of the Company, the Subsidiaries or any other Person;

                           (c)         material licenses, leases, contracts and
other arrangements with respect to property of the Company or any Subsidiary,
including without limitation, real estate leases, material licenses relating to
Company Intellectual Property (other than as listed on Schedule 2.10 and 2.11),
and material sales and supply contracts;

                           (d)        material contracts or instruments to which
the Company or any Subsidiary is a party relating to the borrowing of money, the
capital lease or purchase on an installment basis of any asset, or the guarantee
of any of the foregoing;

                           (e)         material (either individually or, if
related to a similar set of rights or benefits provided for under such
contracts, in the aggregate) contracts of the Company or any Subsidiary with
employees, officers or directors of the Company or any Subsidiary, including
employment, consulting or severance agreements; material (either individually
or, if related to a similar set of circumstances or conditions, in the
aggregate) contracts of the Company or any Subsidiary with the Parent or any
Affiliate (other than as listed on Schedule 2.23, which contracts on Schedule
2.23 shall be considered Material Contracts as defined below);

                           (f)         contracts which contain any noncompete or
similar provision, including any contract that limits the geographical area in
which the Company’s or any Subsidiary’s business may be conducted or the type,
scope or method of business to be conducted by any of them;

                           (g)        contracts under which the Company or any
Subsidiary provides transcription services;

                           (h)        collective bargaining, deferred
compensation, benefit and similar plans and agreements involving the Company or
any Subsidiary; and

                           (i)          other material (either individually or,
if related to a similar set of circumstances or conditions, in the aggregate)
contracts, instruments and commitments of the Company or any Subsidiary, other
than those relating to the categories of contracts described above.

             All the foregoing, including all amendments or modifications
thereto, are referred to as “Material Contracts”.  The Seller and the Parent
have furnished to the Purchaser copies of all Material Contracts.  To the
knowledge of Parent, Seller and the Company:  (i) each Material Contract sets
forth the entire agreement and understanding between the Company and/or each
Subsidiary and the other parties thereto; (ii) each Material Contract is valid,
binding and in full force and effect, and (iii) there is no event which has
occurred or exists, which constitutes or which, with notice, the happening of
any event and/or the passage of time, would constitute a material default or
breach under any such contract by the Company and/or any Subsidiary or any other
party thereto, or would cause the acceleration of any obligation of any party
thereto or give rise to any right of termination or cancellation thereof.  The
Seller and the Company have no reason to believe that the parties to any
Material Contract will not fulfill their obligations thereunder in all material
respects.

             Section 2.13     Accounts Receivable.  All of the accounts
receivable of the Company and each Subsidiary as of the Closing will be valid
and enforceable claims, collectable and subject to no set-off or counterclaim,
except to the extent of the allowance for doubtful accounts with respect to
accounts receivable reflected in the June 30, 2001 balance sheet of the Company
referred to in Section 2.05.  All accounts receivable of the Company and each
Subsidiary are determined in accordance with GAAP and arose out of bona fide
transactions in the ordinary course of business.

             Section 2.14     Warranty Claims.  There are, and since May 11,
2000 there have been, no material claims against the Company or any Subsidiary
alleging any material defects in the Company’s services or products, or alleging
any failure of the Company’s services or products to meet specifications.  The
warranty reserve included in the Balance Sheet will be adequate to cover all
warranty claims relating to services and products sold prior to the Closing.

             Section 2.15     Customers and Suppliers.  Schedule 2.15 sets forth
a list of all current customers of the Company or any Subsidiary.  To the
knowledge of Parent, Seller and the Company, all customers listed on Schedule
2.15 and the Company’s and the Subsidiaries’ other customers will in the
aggregate continue purchasing such services from the Company and any
Subsidiary.  To the knowledge of Parent, Seller or the Company, the Company’s
and the Subsidiaries’ suppliers will continue to provide supplies consistently
to the Company and any Subsidiary.

             Section 2.16     Litigation, Etc.  Except as listed on Schedule
2.16, no action, suit, litigation, proceeding or investigation is pending before
any court, arbitrator or governmental authority or, to the Parent’s, the
Seller’s or the Company’s knowledge, is threatened against or relates to the
Company or any of its Subsidiaries, their respective officers or directors in
their capacities as such, or any of their respective properties or businesses.

             Section 2.17     Taxes.

                           (a)         Except as set forth on Schedule 2.17
hereto, the Company, and each of its Subsidiaries have (i) duly and timely filed
all returns, declarations, reports, estimates, schedules, amendments and
statements (“Returns”) required to be filed by them in respect of any Taxes, all
of which Returns were true and correct as filed (or as subsequently amended) and
correctly reflect the facts regarding the income, business, assets, operations,
activities and status of the Company and its Subsidiaries as well as any Taxes
required to be paid or collected by the Company and its Subsidiaries, (ii)
timely paid or withheld all Taxes that are or were due and payable with respect
to the Returns referred to in clause (i) whether or not shown as due on such
Returns, (iii) established, consistent with past practice, an adequate reserve,
if any, on their books and records for the payment of all Taxes with respect to
any taxable period (or portion thereof) ending on or prior to the Closing Date
for which a Return or payment of Tax is not yet due, and (iv) complied with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and has timely withheld from employee wages and paid over to the proper
governmental authorities when due all amounts required to be so withheld and
paid over.

             For purposes of this Agreement, “Tax” and “Taxes” shall mean (i)
all taxes, charges, fees, levies or other assessments, including any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, withholding on
amounts paid or received, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit taxes, or custom
duties or other taxes, together with any interest or any penalty, addition to
tax or additional amount imposed on the Company or any of its Subsidiaries by
any governmental authority responsible for the imposition of any such taxes
(domestic or foreign) (“Taxing Authorities”), (ii) liability for the payment of
any amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated (including without limitation by operation of Treas.
Reg. § 1.1502-6), combined or unitary group, or being a party to any agreement
or arrangement whereby liability for payments of such amounts was determined or
taken into account with reference to the liability of any other person for any
period prior to the Closing Date and (iii) liability with respect to the payment
of any amounts described in (i) as a result of any express or implied obligation
to indemnify any other person.

                           (b)        Except as set forth on Schedule 2.17
hereto, since May 11, 2000, and, to the knowledge of Parent, Seller and the
Company, prior to May 11, 2000, no Federal, state, local or foreign Returns of
the Company or any of its Subsidiaries have been audited or examined by any
Taxing Authority and neither the Company nor any Subsidiary have received any
written notice of any proposed audit or examination.

                           (c)         Except as set forth on Schedule 2.17
hereto, the Company and its Subsidiaries have not incurred any liabilities for
Taxes other than liabilities arising in the ordinary course of business since
the Balance Sheet Date.

                           (d)        Except as set forth on Schedule 2.17
hereto, the Company and each of its Subsidiaries have never (i) requested or
received a Tax ruling (other than a determination with respect to a qualified
employee benefit plan) or entered into a legally binding agreement (such as a
closing agreement) with any Taxing Authority, which ruling or agreement could
have an effect on the Taxes of the Company or any of its Subsidiaries on or
after the Closing Date, (ii) been a partner in a partnership or a member of a
limited liability company or any other entity treated as a partnership for
federal, state or foreign income tax purposes or (iii) filed any election or
caused any deemed election under Section 338 of the Internal Revenue Code of
1986, as amended (the “Code”), or any similar state or local provision.  Neither
Company nor any Subsidiary (A) is liable, contractually or otherwise, for the
Taxes of any other Person (other than withholding Taxes arising in the ordinary
course of business and other than as arising from the consolidated federal
income tax regulations and comparable state, local and foreign tax laws), (B) is
a “consenting corporation” under Section 341(f) of the Code or (C) has agreed to
or is required to make any adjustment under Code Section 481(a) or 263A (as a
result of any examination by a taxing authority).  Each of the Seller and the
Company is a “United States person” as such term is used in Section 1445 of the
Code.

                           (e)         No property used by the Company or the
Subsidiaries is “tax-exempt use property” within the meaning of Section 168(h)
of the Code; (ii) none of the assets of the Company or the Subsidiaries secures
any debt the interest on which is tax-exempt under Section 103(a) of the Code;
and (iii) neither the Company nor any Subsidiary is a party to the safe harbor
lease within the meaning of Section 168(f)(8) of the Code, as in effect prior to
the Tax Equity and Fiscal Responsibility Act of 1982.

                           (f)         Except as set forth on Schedule 2.17
hereto, (i) no extensions of time have been granted to the Company or any of its
Subsidiaries to file any Return, (ii) no deficiency or adjustment for any Taxes
has been proposed, asserted or assessed in writing against the Company or any of
its Subsidiaries, (iii) there have never been any, and no Federal, state, local
or foreign audits or other administrative proceedings or court proceedings are
currently in progress or pending against the Company or any of its Subsidiaries
with respect to any Taxes owed by the Company or any of its Subsidiaries, and
(iv) no waiver or consent extending any statute of limitations for the
assessment or collection of any Taxes owed by the Company or any of its
Subsidiaries, has been executed by the Company or any of its Subsidiaries or on
behalf of the Company or any of its Subsidiaries, nor are any requests for such
waivers or consents pending.

                           (g)        Except as set forth on Schedule 2.17
hereto, neither the Company nor any of its Subsidiaries has ever been a party to
any Tax sharing or allocation agreement.

                           (h)        Neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that will
result in the payment of any “excess parachute payment” within the meaning of
Section 280G of the Code as a result of the sale of the Shares pursuant to this
Agreement.

                           (i)          The Purchaser has been supplied with
true and complete copies of each Tax Return of the Company and the Subsidiaries,
including each franchise or excise Tax Return based on income filed for the last
three taxable years.

             Section 2.18     Governmental Authorizations and Regulations.

                           (a)         The business of the Company and its
Subsidiaries is being conducted in compliance in all material respects with all
applicable laws, ordinances, rules and regulations of all governmental
authorities relating to its properties or applicable to their business.  Neither
the Company nor any of its Subsidiaries has received any notice of any alleged
violation of any of the foregoing.  Neither the Company nor any of its
Subsidiaries nor any of their assets or properties, operations or businesses are
subject to any court or administrative order, judgment, injunction or decree
specific to the Company or any of the Subsidiaries.

                           (b)        Schedule 2.18 sets forth all licenses,
permits, authorizations and certifications of governmental authorities and
non-governmental self-regulatory or standard-setting authorities held by the
Company or any Subsidiary which are material to the Company, any Subsidiary or
their business (each a “Permit”).  The Company and each Subsidiary is in
material compliance with all Permits, all of which are in full force and
effect.  There are no other such licenses, permits, authorizations or
certifications which are material to the Company, any Subsidiary or their
business as currently conducted which the Company has not obtained and which, in
good industry practice, the Company or any Subsidiary should hold for the
conduct of its business.

             Section 2.19     Labor Matters.

                           (a)         Neither the Company nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement, and
there are no labor or collective bargaining agreements that pertain to any of
their employees.  No employees of the Company or any of its Subsidiaries are
represented by any labor organization.  No labor organization or group of
employees of the Company or any of its Subsidiaries has made a pending demand
for recognition, and there are no representation proceedings or petitions
seeking a representation proceeding presently pending or, to the knowledge of
the Parent, the Seller, the Company or any Subsidiary, threatened to be brought
or filed with the National Labor Relations Board or other labor relations
tribunal.  There is no organizing activity involving the Company or any of its
Subsidiaries pending or, to the knowledge of the Parent, the Seller, the Company
or any Subsidiary, threatened by any labor organization or group of employees of
the Company or any of its Subsidiaries.  There are no (x) strikes, work
stoppages, slowdowns, lockouts or arbitrations or (y) material grievances or
other material labor disputes pending or, to the knowledge of the Parent, the
Seller, the Company and the Subsidiaries of the Company, threatened against or
involving the Company or any of its Subsidiaries.  There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge of the
Parent, the Seller, the Company or any Subsidiary, threatened against or
involving the Company or any of its Subsidiaries or any group of employees of
the Company or any of its Subsidiaries.  There are no complaints, charges or
claims against the Company or any of its Subsidiaries pending or, to the
knowledge of the Parent, the Seller, the Company or any Subsidiary, threatened
to be brought or filed with any governmental body based on, arising out of, in
connection with, or otherwise relating to the employment by the Company or any
of its Subsidiaries of any individual, including any claim for workers’
compensation.  Hours worked by and payments made to employees of the Company and
its Subsidiaries have not been in violation of the federal Fair Labor Standards
Act or any other law dealing with such matters.

                           (b)        The Company and each of its Subsidiaries
have complied in all material respects with all laws, statutes, rules,
regulations, orders, decrees and other governmental requirements relating to the
hiring and retention of all employees, leased employees and independent
contractors, including those relating to wages, hours, labor, employment and
employment practices, terms and conditions of employment, equal employment
opportunity, collective bargaining and the payment of social security and other
employment taxes.

                           (c)         Schedule 2.19 sets forth a complete list
of all employees of the Company and each Subsidiary, with annual compensation in
excess of $70,000, showing date of hire, hourly rate or salary or other basis of
compensation and other benefits accrued as of a recent date, and job function of
salaried employees.

             Section 2.20     Insurance.  All policies of fire, liability,
workers’ compensation and other forms of insurance providing insurance coverage
to or for the Company and its Subsidiaries are listed on Schedule 2.20 hereto,
together with the scheduled expiration date of such policies, and (i) the
Company and each of its Subsidiaries are named insureds under all such policies,
(ii) all premiums with respect thereto covering all periods up to and including
the Closing Date have been paid, (iii) no notice of cancellation or termination
has been received with respect to any such policy, and (iv) such policies
provide insurance in such amounts and against such risks as are customary for
companies of similar size in the same business as the Company and its
Subsidiaries.  All such policies are in full force and effect and will remain in
full force and effect to the Closing Date.

             Section 2.21     Employee Benefit Plans.

                           (a)         Schedule 2.12 sets forth all employee
compensation and benefit plans, agreements, commitments, practices or
arrangements of any type (including, but not limited to, plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) offered, maintained or contributed to by the Company or any
Subsidiary for the benefit of current or former employees or directors of the
Company or any Subsidiary, or with respect to which the Company or any
Subsidiary has or may have any liability, whether direct or indirect, actual or
contingent (including, but not limited to, liabilities arising from affiliation
under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA)
(collectively, the “Benefit Plans”).

                           (b)        With respect to each Benefit Plan, the
Company and each Subsidiary has delivered to the Purchaser true and complete
copies of:  (i) any and all plan texts and agreements (including, but not
limited to, trust agreements, insurance contracts and investment management
agreements); (ii) any and all material written employee communications by or on
behalf of the Parent, the Seller, the Company or any Subsidiary (including all
summary plan descriptions and material modifications thereto); (iii) the two
most recent annual reports, if applicable; (iv) the most recent annual and
periodic accounting of plan assets, if applicable; (v) the most recent
determination letter received from the Internal Revenue Service (the “Service”),
if applicable; and (vi) in the case of any unfunded or self-insured plan or
arrangement, a current estimate of accrued and anticipated liabilities
thereunder.

                           (c)         With respect to each Benefit Plan, except
as set forth on Schedule 2.21:  (i) if intended to qualify under Section 401(a)
of the Code, such plan so qualifies, and its trust is exempt from taxation under
Section 501(a) of the Code; (ii) such plan has been administered and enforced in
accordance with its terms and all applicable laws, regulations and rulings in
all material respects; (iii) no breach of fiduciary duty has occurred with
respect to which the Company or any Subsidiary or any Benefit Plan may be liable
or otherwise damaged in any material respect; (iv) no material disputes nor any
audits or investigations by any governmental authority are pending or, to the
knowledge of Parent, Seller or the Company, threatened; (v) no “prohibited
transaction” (within the meaning of either Section 4975(c) of the Code or
Section 406 of ERISA) has occurred with respect to which the Company or any
Subsidiary may be liable or otherwise damaged in any material respect; (vi) all
contributions, premiums, and other payment obligations have been recognized on
the consolidated financial statements of the Company and each Subsidiary in
accordance with generally accepted accounting principles in the United States,
and, to the extent due, have been made on a timely basis, in all material
respects; (vii) all nonforfeitable contributions or benefit payments made or
required to be made under each Benefit Plan with respect to which a deduction is
available meet the requirements for deductibility under the Code or will meet
such requirements with the passage of time; (viii) there is nothing that would
prevent the Company and each participating Subsidiary from amending, modifying
or terminating such plan, or any portion of it, at any time without liability to
itself; and (ix) no Benefit Plan requires the Company to continue to employ any
employee or director.

                           (d)        No Benefit Plan is, or has ever been,
subject to Title IV of ERISA.

                           (e)         With respect to each Benefit Plan which
provides welfare benefits of the type described in Section 3(1) of ERISA:  no
such plan provides medical or death benefits with respect to current or former
employees or directors of the Company beyond their termination of employment,
other than coverage mandated by Sections 601-608 of ERISA and 4980B(f) of the
Code, (ii) each such plan has been administered in compliance with Sections
601-609 of ERISA and 4980B(f) of the Code where applicable; (iii) no such plan
is or is provided through a “multiple employer welfare arrangement” within the
meaning of Section 3(40) of ERISA; and (iv) no such plan has reserves, assets,
surpluses or prepaid premiums in excess of the qualified asset account limits
under Code Section 419A.

                           (f)         The consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements (except as
specifically provided in the Ancillary Agreements) will not, solely as a result
of the sale of the Shares and the resulting change of control of the Company,
(i) entitle any individual to severance pay, (ii) accelerate the time of payment
or vesting under any Benefit Plan, or (iii) increase the amount of compensation
or benefits due to any individual.

             Section 2.22     Environmental Matters.  The ownership or use of
the Company’s and each Subsidiary’s premises and assets, the occupancy and
operation thereof, and the conduct of the Company’s and each Subsidiary’s
operations and businesses are in material compliance with all applicable
foreign, federal, state and local laws, ordinances, regulations, standards and
requirements relating to pollution, environmental protection, hazardous
substances and related matters.  To the knowledge of Parent, Seller and the
Company, there is no material liability attaching to such premises or assets or
the ownership or operation thereof as a result of any hazardous substance that
may have been discharged on or released from such premises, or disposed of
on-site or off-site, or any other circumstance occurring prior to the Closing or
existing as of the Closing.  For purposes of this Section, “hazardous substance”
shall mean oil or any other substance which is included within the definition of
a “hazardous substance”, “pollutant”, “toxic substance”, “toxic waste”,
“hazardous waste”, “contaminant” or other words of similar import in any
foreign, federal, state or local environmental law, ordinance or regulation.

             Section 2.23     Related Party Transactions.  Except as set forth
on Schedule 2.23 hereto and except as contemplated by this Agreement and the
Ancillary Agreements, there are no existing, and have not been since the Balance
Sheet Date, any agreements individually or in the aggregate in an amount greater
than $50,000 which are (i) between the Company or any of its Subsidiaries,
(ii) between the Company or any of its Subsidiaries, on the one hand, and either
(A) the Parent, Seller or an Affiliate, on the other hand, or (B) any officer or
director of the Company, any Subsidiary, the Parent or the Seller.  For purposes
of this section, agreements within each subpart (i), (ii)(A) or (ii)(B) are
aggregated to determine whether the $50,000 threshold is met.

             Section 2.24     Bank Accounts.  Schedule 2.24 contains a true and
compete list of (i) all banks, trust companies, savings and loan associations
and brokerage firms with which the Company or any Subsidiary has an account or
safe deposit box and (ii) the names of all persons authorized to draw thereon,
to have access thereto or to authorize transactions therein.

             Section 2.25     Brokers’ or Finders’ Fees.  All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out directly with the Purchaser, without the intervention of any person
on behalf of the Parent, the Seller, the Company or any Subsidiary in such
manner as to give rise to any claim by any person against the Purchaser or the
Company or any of its Subsidiaries for a finder’s fee, brokerage commission or
similar payment.

             Section 2.26     Disclosure.  The representations and warranties
contained in this Agreement do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained herein not misleading.

ARTICLE III
REPRESENTATIONS AND WARRANTIES
AS TO THE PARENT

             The Parent represents and warrants to the Purchaser that each of
the statements contained in this Article III is true and correct and will be
true and correct as of the Closing Date:

             Section 3.01     Organization and Corporate Power; Ownership of the
Seller; Authorization of Agreements, Etc.

                           (a)         The Parent is a corporation duly
organized and validly existing under the laws of the State of Oregon.  The
Parent has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as currently
conducted and to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder.  The Parent is the beneficial and record owner of all of the issued
and outstanding shares of capital stock of the Seller.

                           (b)        The execution, delivery and performance of
this Agreement by the Parent has been duly authorized by all requisite corporate
action on the part of the Parent (including all requisite action of the Board of
Directors and stockholders of the Parent).  Neither the execution and delivery
by the Parent of this Agreement and the Ancillary Agreements to which it is a
party nor the performance by the Parent of its obligations hereunder and
thereunder will (A) violate (i) any provision of law or any governmental
regulation or order of any court or other agency of government that is
applicable to the Parent, (ii) the Articles of Incorporation or Bylaws of the
Parent, (iii) any judgment, award or decree applicable to the Parent, or (iv)
any provision of any note, indenture, agreement, lease or other instrument to
which the Parent is a party, or by which the Parent or any of its properties or
assets are bound or affected, or (B) conflict with, give rise to a right of
acceleration or termination under, result in any payment or benefit becoming due
thereunder, result in the increase of any payment or benefit due thereunder,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any note, indenture, agreement, lease or other instrument to which
the Parent is a party, or (C) result in the creation or imposition of any Lien
upon any of the properties or assets of the Parent.

             Section 3.02     Validity.  This Agreement has been duly executed
and delivered by the Parent and constitutes, and each of the Ancillary
Agreements to which the Parent is a party, when executed and delivered by the
Parent as contemplated hereby, will constitute, the legal, valid and binding
obligation of the Parent, enforceable against the Parent in accordance with
their respective terms.

             Section 3.03     Governmental Approvals.  No order, authorization,
approval or consent from, or filing with, any federal or state governmental or
public body or other authority having jurisdiction over the Parent is required
for the execution, delivery and performance by the Parent of this Agreement or
any Ancillary Agreement to which the Parent is a party, or is necessary in order
to ensure the legality, validity, binding effect or enforceability against the
Parent of this Agreement or any such Ancillary Agreement.

             Section 3.04     Litigation Relating to the Transactions
Contemplated Hereby.  There are no actions, suits, proceedings or claims pending
before any court, arbitrator or government agency against or affecting the
Parent which might enjoin or prevent the consummation of the transactions
contemplated by this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER

             The Purchaser represents and warrants to the Parent and the Seller
that each of the statements contained in this Article IV is true and correct and
will be true and correct as of the Closing Date:

             Section 4.01     Power and Authority.  The Purchaser has full power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which it is a party, and to perform its obligations hereunder and thereunder.

             Section 4.02     Authorization of Agreements, Etc.  The execution,
delivery and performance of this Agreement by the Purchaser has been duly
authorized by all requisite action on the part of the Purchaser.  Neither the
execution and delivery by the Purchaser of this Agreement and the Ancillary
Agreements to which the Purchaser is a party nor the performance by the
Purchaser of its obligations hereunder and thereunder will violate (i) any
provision of law or any governmental regulation or order of any court or other
agency of government that is applicable to the Purchaser, (ii) the Certificate
of Formation of the Purchaser, (iii) any judgment, award or decree applicable to
the Purchaser, or (iv) any provision of any note, indenture, agreement, lease or
other instrument to which the Purchaser is a party, or by which the Purchaser or
any of its properties or assets are bound or affected.

             Section 4.03     Validity.  This Agreement has been duly executed
and delivered by the Purchaser and constitutes, and the Ancillary Agreements to
which the Purchaser is a party, when executed and delivered by the Purchaser as
contemplated hereby, will constitute, the legal, valid and binding obligation of
the Purchaser, enforceable against it in accordance with their respective terms.

             Section 4.04     Governmental Approvals.  No order, authorization,
approval or consent from, or filing with, any federal or state governmental or
public body or other authority having jurisdiction over the Purchaser is
required for the execution, delivery and performance by the Purchaser of this
Agreement or any Ancillary Agreement to which the Purchaser is a party, or is
necessary in order to ensure the legality, validity, binding effect or
enforceability against the Purchaser of this Agreement or any such Ancillary
Agreement.

             Section 4.05     Litigation Relating to the Transactions
Contemplated Hereby.  There are no actions, suits, proceedings or claims pending
before any court, arbitrator or government agency against or affecting the
Purchaser that might enjoin or prevent the consummation of the transactions
contemplated by this Agreement.

             Section 4.06     Brokers’ or Finders’ Fees.  All negotiations
relative to this Agreement and the transactions contemplated hereby and thereby
have been carried out by the Purchaser and its stockholders directly with the
Parent and the Seller, without the intervention of any person on behalf of the
Purchaser in such manner as to give rise to any claim by any person against the
Parent or the Seller for a finder’s fee, brokerage commission or similar
payment.

             Section 4.07     Purchase for Investment; Related Party.  Purchaser
is an accredited investor within the meaning of Rule 501 issued under the
Securities Act of 1933, as amended.  Purchaser will acquire the Shares for its
own account for the purpose of investment, it being understood that the right to
dispose of the Shares shall be within the discretion of Purchaser.  Purchaser
shall not transfer or otherwise dispose of any of the Shares, or any interest
therein, in any manner as to cause the Parent or the Seller or any affiliate
thereof to be in violation of the registration requirements of the Securities
Act of 1933, as amended, or applicable states securities or blue sky laws.  Mr.
Scott Steele is a principal of Parthenon Capital, LLC and will be so at Closing.

ARTICLE V
COVENANTS

             Section 5.01     Certain Covenants of the Parent and the Seller.

                           (a)         Except as otherwise agreed to in writing
by the Purchaser, at all times between the date hereof and the Closing Date, the
Parent and the Seller agree that they shall cause the Company and its
Subsidiaries to:

                           (i)          operate the Company’s and its
Subsidiaries’ business only in the usual, regular and ordinary manner and on a
basis consistent with past practice, and use commercially reasonable efforts to
preserve the Company’s and its Subsidiaries’ current business organization, keep
available the services of the officers and employees of the Company and its
Subsidiaries and preserve the Company’s and its Subsidiaries’ present
relationships with their customers and all other persons having business
dealings with the Company and its Subsidiaries;

                           (ii)         maintain the Company’s and its
Subsidiaries’ assets and properties in good repair, order and condition,
reasonable wear and tear excepted;

                           (iii)        maintain the Company’s and its
Subsidiaries’ books of account and records in the usual, regular and ordinary
manner, on a basis consistent with past practice, and to use commercially
reasonable efforts to comply with all laws applicable to the Company and/or its
Subsidiaries and perform all the Company’s and its Subsidiaries’ contractual
obligations without default;

                           (iv)       not change the character of the Company’s
and its Subsidiaries’ businesses in any manner (including their corporate or
limited liability existence); and

                           (v)        not, with respect to the Company and/or
its Subsidiaries:

                           (A)       incur any obligation, debt or liability of
any kind or nature whatsoever (whether fixed, absolute, accrued, contingent,
secured or unsecured, known or unknown or otherwise, and whether due or to
become due), except trade payables and/or other business obligations (other than
guarantees, obligations in respect of letters of credit or debt for borrowed
money) incurred in the ordinary course of business and consistent with past
practice;

                           (B)        discharge or satisfy any Lien or pay any
obligation, debt or liability of any kind or nature whatsoever (whether fixed,
absolute, accrued, contingent, secured or unsecured, known or unknown or
otherwise, and whether due or to become due), other than payments of
obligations, debts or liabilities (other than guarantees, obligations in respect
of letters of credit or debt for borrowed money) in the ordinary course and
consistent with past practice;

                           (C)        mortgage, pledge or subject to any Lien
(other than Permitted Liens) any of the assets or properties of the Company
and/or its Subsidiaries;

                           (D)        other than Permitted Cash Distributions
(as defined below), transfer, lease or otherwise dispose of any of its assets or
properties except to persons other than Related Parties for fair consideration
in the ordinary course of business and consistent with past practice or, except
for fair consideration in the ordinary course of business and consistent with
past practice and from persons other than Related Parties, acquire any assets or
properties;

                           (E)        other than Permitted Cash Distributions,
declare, set aside or pay any distribution (whether in cash, stock or property
or any combination thereof) in respect of its capital stock or redeem or
otherwise acquire any of its capital stock or split, combine or otherwise
similarly change its capital stock or authorize the creation or issuance of or
issue or sell any capital stock or any securities or obligations convertible
into or exchangeable therefor, or give any person any right to acquire any
capital stock from the Company or any of its Subsidiaries, or agree to take any
such action;

                           (F)        make any loan or investment of a capital
nature, whether by purchase of stock or securities, contributions to capital,
property transfers or otherwise, in any other partnership, corporation or other
entity;

                           (G)        cancel or compromise any debt or claim,
except, with respect to debts of or claims against persons other than Related
Parties, in the ordinary course of business and consistent with past practice;

                           (H)        waive or release any rights of material
value, including, or surrender or cause to be revoked or otherwise terminated
any license,  approval, authorization or consent from any court, administrative
agency or other governmental authority;

                           (I)         other than in the case of one employee as
disclosed verbally to Purchaser, make or grant any wage, salary or benefit
increase or bonus payment applicable to any group or classification of employees
generally, enter into or amend the terms of any employment contract with, or
make any loan to, or grant any severance benefits to, or enter into or amend the
terms of any transaction of any other nature with, any Related Party;

                           (J)         enter into any other transaction,
contract or commitment, except in the ordinary course and consistent with past
practice;

                           (K)        except for modifications to contracts with
persons who are not Related Parties made in the ordinary course and consistent
with past practice, amend or modify in any way adverse to the interests of the
Company or any of its Subsidiaries any contract or amend or modify in any way
the Certificate or Articles of Incorporation or Bylaws or comparable governing
documents of the Company or any of its Subsidiaries; or

                           (L)        take any other action which could
reasonably be expected to have a Material Adverse Effect.

                           (b)        Between the date of this Agreement and the
Closing Date, the Parent and the Seller shall afford, and shall cause the
Company and its Subsidiaries to afford, the representatives of the Purchaser
reasonable access during normal business hours to the offices, facilities, books
and records of the Company and its Subsidiaries and the opportunity to discuss
the affairs of the Company and its Subsidiaries with officers, employees,
accountants, customers, suppliers and landlords of the Company and its
Subsidiaries familiar therewith.

                           (c)         Between the date hereof and the Closing
Date, Parent and the Seller (x) shall not permit the Company and its
Subsidiaries to enter into any transaction or make any agreement or commitment,
or permit any event to occur, which would result in any of the representations,
warranties or covenants of the Parent or the Seller contained in Articles II and
III of this Agreement not being true and correct in any material respect at and
as of the time immediately after the occurrence of such transaction or event and
(y) shall use commercially reasonable efforts to promptly apply for and cause
the Company and its Subsidiaries to promptly apply for and seek to obtain all
authorizations, consents, waivers and approvals required in connection with the
execution, delivery and performance of this Agreement and the Ancillary
Agreements, and to seek the fairness opinion referred to in Article VI.

             Section 5.02     Books and Records.  Parent and the Seller shall
cause the Company to deliver to the Purchaser or shall cause to be held at the
principal office or other office of the Company where such principal records are
normally kept, all books and records used in the operation of the business of
the Company and its Subsidiaries and all files, documents, papers, agreements,
books of account and other records pertaining to the business of the Company and
its Subsidiaries, to the extent that such books, records, files and other
materials are not theretofore located at the office of the Company. 
Notwithstanding the foregoing, the Purchaser waives, and shall cause the Company
and its Subsidiaries to waive, any and all rights with respect to any of the
following, which the Purchaser agrees will belong to the Seller and its Parent: 
(a) all of the books, files, documents and records of attorneys or accountants
relating to their respective representations of the Seller or the Parent in
connection with the negotiation, execution and delivery of this Agreement and
the transactions contemplated by this Agreement; and (b) the Company’s tax
returns, tax and financial records and reports, and other documents that Company
is required by law to retain, or that will be necessary or advisable for the
Parent or the Seller to retain, in their reasonable discretion, for tax or
related purposes, provided that the Company shall be given a copy of all such
returns, records and reports.

             Section 5.03     Certain Tax Matters.

                           (a)         Transfer Taxes.  All stamp, documentary,
transfer, real property gains, sales, use and other such Taxes and fees
(including any penalties and interest) imposed upon or incurred by any of the
parties hereto in connection with the transfer of the Shares to the Purchaser
under this Agreement, and any legal and other expenses relating thereto, shall
be borne by the Purchaser.  The Seller and the Purchaser shall, each at their
own expense, prepare and file all necessary Tax Returns and other documents with
respect to all such stamp, documentary, transfer, real property gains, sales,
use and other such Taxes and fees.

                           (b)        The Purchaser shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Company and its
Subsidiaries for all periods ending on or prior to the Closing Date which are
filed after the Closing Date (other than income or similar Tax Returns with
respect to periods for which a consolidated, unitary or combined Income Tax
Return of the Seller will include the operations of the Company and its
Subsidiaries, in which case the Seller shall prepare or cause to be prepared and
file or cause to be filed all such Tax Returns for the Company and its
Subsidiaries).  The Purchaser shall permit the Parent and the Seller to review
and comment on each such Tax Return prepared by or at the direction of the
Purchaser described in the preceding sentence prior to filing and shall make
such revisions to such Income Tax Returns as are reasonably requested by the
Parent and the Seller.  The Parent and the Seller shall be liable for and shall
indemnify the Purchaser against all Taxes of the Company and its Subsidiaries
with respect to any period ending on or before the Closing Date, in all such
cases within fifteen (15) days after payment by the Purchaser or the Company and
its Subsidiaries of such Taxes.

                           (c)         The Purchaser shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns of the Company and its
Subsidiaries for Tax periods which begin before the Closing Date and end after
the Closing Date.  The Parent and the Seller shall be liable for and indemnify
the Purchaser against, prior to the date on which Taxes are paid with respect to
such periods, an amount equal to the portion of such Income Taxes which relates
to the portion of such Taxable period ending on the Closing Date.  For purposes
of this Section, in the case of any Taxes based on gross or net income that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates to
the portion of such Taxable period ending on the Closing Date shall be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date.  For purposes of this Section, any transactions not in the
ordinary course of business occurring on the Closing Date after the Purchaser’s
purchase of the Shares shall be deemed to relate to the Taxable period beginning
after the Closing Date.  Any Tax that is not based on gross or net income (such
as real property or other ad valorem Taxes) for any Taxable period that begins
before and ends after the Closing Date shall be allocated between the Purchaser
and the Seller based on the relative numbers of days within such period that are
(i) before or on the Closing Date, to be borne by the Seller, and (ii) after the
Closing Date, to be borne by the Purchaser.  All determinations necessary to
give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Company and its Subsidiaries.

                           (d)        From and after the Closing Date, the
Parent and the Seller, on the one hand, and the Purchaser, the Company and its
Subsidiaries, on the other hand, shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns and any audit, litigation or other proceeding with respect to Taxes. 
Such cooperation shall include the retention and (upon the other party’s
request) the provision of records and information that are reasonably relevant
to any such filing, audit, litigationor other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any materials provided hereunder.  Each party agrees to retain
all books and records with respect to Tax matters pertinent to the Company and
its Subsidiaries relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by the other party, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority.

                           (e)         To the extent consistent with the
regulations promulgated under Section 338(h)(10) of the Code, the Purchaser and
the Seller agree to report all transactions not in the ordinary course of
business occurring on the Closing Date after the Purchaser’s purchase of the
Company stock on the Purchaser’s federal income tax return to the extent
permitted by Treas. Reg. § 1.1502-76(b)(1)(B).

                           (f)         No Election To Reattribute Losses. 
Neither the Parent nor the Seller shall make, or seek to cause the Company or
any of its Subsidiaries to make, any election under Treas. Reg. § 1.1502-20(g)
that would have the effect of reattributing any portion of any net operating
loss carryover or any net capital loss carryover from the Company or any of its
Subsidiaries to the Parent or the Seller.

                           (g)        Tax Sharing Agreements.  Any Tax sharing
agreement between or among the Company (and any Subsidiary) and any other person
shall be terminated immediately before the Closing Date and shall have no
further effect for any Taxable period.

                           (h)        Section 338(h)(10) Election.  At the
request of the Purchaser, the Parent and the Seller will join with the Purchaser
in making an election under Section 338(h)(10) of the Code and the regulations
thereunder (and any corresponding elections under state, local or foreign law)
with respect to the transactions contemplated hereby (collectively, a “Section
338(h)(10) Election”).  A request by Purchaser for a Section 338(h)(10) Election
will be valid only if made within sixty (60) days of the Closing Date, in
writing, to the Seller.  If Purchaser makes a request for a 338(h)(10) election,
Purchaser will prepare and furnish to Seller a draft Form 8023 prepared in
accordance with Section 338(h)(10) of the Code and regulations thereunder, no
later than 60 days before the filing date for such Form 8023, for Seller’s
review and comment.  Purchaser shall prepare the final Form 8023 and furnish it
to Seller no later than 20 days before the filing date.  Purchaser shall not be
required to make any payment to Seller with respect to Taxes attributable to the
making of the Section 338(h)(10) Election.

             Section 5.04     Confidentiality.  Following the Closing, (i) the
Parent, the Seller and the Affiliates shall not, directly or indirectly,
disclose, divulge or make use of any trade secrets or other information of a
business, financial, marketing, technical or other nature pertaining to the
transcription services business of Company or the Subsidiaries, including
information of others relating thereto that the Company or the Subsidiaries has
agreed to keep confidential and (ii) the Purchaser, the Company and the
Subsidiaries shall not, directly or indirectly, disclose, divulge or make use of
any trade secrets or other information of a business, financial, marketing,
technical or other nature pertaining to the Electronic Medical Record (as
defined below) business and the Internet Portal (as defined below) business of
the Parent, the Seller or the Affiliates, including information of others
relating thereto that the Parent, the Seller or the Affiliates has agreed to
keep confidential, except, in each case, to the extent that such information
shall have become public knowledge other than by breach of this Agreement by the
party wishing to disclose, divulge or make use of such information, and except
as necessary to file tax returns or other required reports with governmental
agencies or as otherwise required by law. As used herein, “Electronic Medical
Record” means the entire line of Logician software products and Medscape Mobile
software products.  As used herein, “Internet Portal” means the current business
of medscape.com solely to the extent that it provides accredited continuing
medical education and peer reviewed medical publications to physicians and other
health professionals.

             Section 5.05     Noncompetition; Nonsolicitation and Use of Trade
Name.

                           (a) Noncompetition.  For a period of two years after
the Closing Date, Parent, Seller and the Affiliates will not, directly or
indirectly, or as a stockholder, partner, employee, consultant or other owner or
participant in any Person, engage in the business of medical record
transcription anywhere in the United States or anywhere the Company or any
Subsidiary currently engages in this business, subject to the following
limitations:

                           (1) the applicability of this covenant will terminate
as to Parent, Seller, an Affiliate or a business division of Parent upon the
closing of a transaction involving a sale of more than 50% of the outstanding
securities or assets or merger of that entity or division to or with an
unrelated party; and

                           (2) this covenant shall not apply with respect to (i)
the ownership or acquisition by Parent, Seller or an Affiliate of up to ten
percent of any Person which is engaged in the business described in the
foregoing covenant; or (ii) the acquisition by Parent, Seller or an Affiliate of
a majority of the stock or a majority of the assets of a Person that engages in
the business described in the foregoing covenant, provided that the portion of
the business of such Person that so competes does not exceed ten percent of the
total business of the Person as of the date of acquisition.

                           (b) Nonsolicitation.  For a period of two years after
Closing Date, the Parent, the Seller and the Affiliates will not, directly or
indirectly, solicit or endeavor to entice away from the Company or any
Subsidiary any person who is, or was within the one-year period prior thereto,
an employee of the Company or any Subsidiary, subject to the following
limitations:

                           (1) the foregoing nonsolicitation provision will not
prevent Parent, Seller or any Affiliate from employing any such person who
contacts Parent, Seller or an Affiliate on his or her own initiative without any
direct or indirect solicitation by, or encouragement (not including a general
solicitation of employment not specifically directed towards employees of the
Company) from Parent, Seller or an Affiliate; and

                           (2)  the applicability of foregoing nonsolicitation
provision will terminate as to Parent, Seller, an Affiliate or a business
division of Parent upon the closing of a transaction involving a sale of more
than 50% of the outstanding securities or assets or merger of that entity or
division to or with an unrelated party.

                           (c)  Use of Trade Name.  For a period of one year
after the Closing Date, Parent, Seller and the Affiliates will not and will not
permit any of their affiliates (as such term is defined in Rule 405 under the
Securities Act of 1933, as amended), to use the name “Medscape Transcription” or
any name confusingly similar to such name, provided that this provision shall
not limit the use of the name “Medscape” other than in connection with the term
“Transcription” or any term confusingly similar thereto.

             Section 5.06     No Use of Names or Marks.

                           (a)         Agreement by Parent and Seller. 
Following the Closing, the Parent, the Seller and the Affiliates shall not use
(i) the corporate names of the Company or any Subsidiary as set forth on their
respective charters, as amended, or (ii) the trademarks, service marks, trade
dress, trade names, logos (in each case, whether registered or unregistered) of
the Company or any Subsidiary listed on Schedule 2.11 or use the names of any of
the Company’s or any Subsidiary’s employees, stockholders or members, in any
press releases, advertising, promotional or sales literature without prior
written consent from the Company in each case and, if applicable, from such
employee, stockholder or member in each case.

                           (b)        Agreement by the Purchaser.  Following the
Closing and except as provided in the Transition Services Agreement (as
hereafter defined), the Purchaser and its Affiliates shall not use any
trademarks, service marks, trade dress, trade names, logos and corporate names
(in each case whether registered or unregistered) of Parent, Seller or any
Affiliate or use the names of any of employee or stockholder of Parent, Seller
or any Affiliate, in any press releases, advertising, promotional or sales
literature without prior written consent from the Parent in each case and, if
applicable, from such employee or stockholder in each case.

             Section 5.07     Injunctive Relief.  The Parent and the Seller on
the one hand, and the Purchaser on the other hand, acknowledge that any breach
or threatened breach of the provisions of Sections 5.04, 5.05 or 5.06 of this
Agreement will cause irreparable injury to the other party for which an adequate
monetary remedy does not exist.  Accordingly, in the event of any such breach or
threatened breach, such other party shall be entitled, in addition to the
exercise of other remedies, to seek and (subject to court approval) obtain
injunctive relief, without necessity of posting a bond, restraining such other
party from committing such breach or threatened breach.

ARTICLE VI
CONDITIONS PRECEDENT

             Section 6.01     Conditions Precedent to the Obligations of the
Purchaser.  The obligation of the Purchaser to consummate the purchase of the
Shares contemplated by this Agreement are subject, at the option of the
Purchaser, to the satisfaction at or prior to the Closing of each of the
following conditions:

                           (a)         Accuracy of Representations and
Warranties.  The representations and warranties of the Parent and the Seller
contained in Articles II and III of this Agreement shall be true and correct in
all material respects (except that the representations and warranties in Section
2.01(a), (d), (e) and (g) and in Section 2.04, and each other representation to
the extent qualified by materiality, shall be true and correct in all respects)
on and as of the Closing Date as though made at and as of that date (except for
those representations and warranties that specifically relate to an earlier
date, which shall be as though made at and as of such earlier date), and the
Parent and the Seller shall have each so certified to the Purchaser in writing.

                           (b)        Compliance with Covenants.  The Parent and
the Seller shall have each performed and complied in all material respects with
all terms, agreements, covenants and conditions of this Agreement to be
performed or complied with by it at or prior to the Closing, and the Parent and
the Seller shall have each so certified to the Purchaser in writing.

                           (c)         No Material Adverse Change.  Since June
30, 2001, there shall not have occurred any event which could reasonably be
expected to have a Material Adverse Effect, and the Parent and the Seller shall
have each so certified to the Purchaser in writing.

                           (d)        Legal Actions or Proceedings.  No legal
action or proceeding shall have been instituted by any party or threatened in
writing by any governmental department, agency or authority, in either case
seeking to restrain, prohibit, invalidate or otherwise materially affect the
consummation of the transactions contemplated hereby or which could, whether or
not adversely decided, adversely affect the operation of the business of the
Company and its Subsidiaries after the Closing.

                           (e)         Licenses, Consents, etc. Received.  The
Parent and the Seller shall have obtained and delivered to the Purchaser copies
of all consents, licenses, approvals and permits of other parties required to be
obtained for the transactions contemplated hereby as to which the failure to
obtain the same could reasonably be expected to have a Material Adverse Effect
or interfere with the Company’s right or ability to consummate such
transactions, or the Company’s and its Subsidiaries’ ability to carry on any of
their businesses, as now conducted, after the Closing, and no such consent,
license, approval or permit shall have been withdrawn or suspended.

                           (f)         Management Arrangements.  The Company
shall have entered into employment, stockholder and other agreements with Dr.
Richard Rehm with respect to his continued employment by the Company, his
agreement not to compete with the Company or any Subsidiary, and his economic
interests in the Company in a form reasonably required by the Purchaser.

                           (g)        Stock Certificates.  The Purchaser shall
have received certificates from the Seller evidencing the Shares duly endorsed
for transfer and free and clear of all liens, claims, encumbrances and
restrictions.

                           (h)        Certificates; Documents.  The Purchaser
shall have received copies of the following for each of the Seller and the
Company certified by its Secretary to the Purchaser’s satisfaction:  (i) its
Certificate of Incorporation, certified by the Secretary of State of Delaware;
(ii) a certificate of the Secretary of State of Delaware as to its legal
existence and good standing; (iii) its bylaws; and (iv) votes adopted by its
stockholders if necessary and resolutions adopted by its directors authorizing
the execution, delivery and performance of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated hereby.  The
Purchaser shall have also received each Subsidiary’s organizational documents,
certified by the appropriate governmental authority, a certificate as to each
Subsidiary’s legal existence and good standing certified by the appropriate
governmental authority and each Subsidiary’s bylaws.  The Purchaser shall also
have received such other certificates, documents and materials as it shall
reasonably request.

                           (i)          Escrow Agreement.  The Seller and the
escrow agent, Boston Safe Deposit and Trust (the “Escrow Agent”), shall have
entered into an Escrow Agreement (the “Escrow Agreement”), in substantially the
form attached hereto as Exhibit 6.01(i).

                           (j)          Transition Services Agreement.  The
Parent and the Seller shall have entered into a Transition Services Agreement
(the “Transition Services Agreement”) , in substantially the form attached
hereto as Exhibit 6.01(j).

                           (k)         Opinion of Counsel to the Company and the
Sellers.  The Purchaser shall have received an opinion of Stoel Rives LLP,
counsel to the Parent, the Seller and the Company, dated as of the date of the
Closing, to the effect set forth in Exhibit 6.01(k).

                           (l)          Certificates of Officers of the Parent
and Seller.  The Purchaser shall have received a certificate from an officer of
each of the Parent and the Seller, dated as of the date of the Closing, to the
effect of the second sentence of Section 2.02(b).

                           (m)        Leases.  The real property leases (the
“Leases”) with Highwoods/Tennessee Holdings, L.P. and Weeks Realty, L.P., as
landlords for premises located at 5301 Virginia Way, Suite 250, Brentwood, TN
and Airpark Business Center XIV, 5259 Harding Place, Nashville, TN, shall be
assigned to and assumed by the Parent, and, to the extent reasonably
practicable, the Company and the Subsidiaries shall be released therefrom by the
landlords, in a form satisfactory to the Purchaser.

                           (n)        Actions and Proceedings.  Prior to the
Closing, all actions, proceedings, instruments and documents required to carry
out the transactions contemplated hereby or incident hereto and all other legal
matters required for such transactions shall have been reasonably satisfactory
to counsel for the Purchaser.

                           (o)        Due Diligence.  The Purchaser shall be
satisfied with the scope and results of its investigation and due diligence
review of the Company, the Subsidiaries and their assets, affairs, condition
(financial and otherwise), businesses and prospects.

             Section 6.02     Conditions Precedent to the Obligations of the
Seller.  The obligation of the Seller to consummate the sale and transfer of the
Shares contemplated by this Agreement is subject, at the option of the Seller,
to the satisfaction at or prior to the Closing of each of the following
conditions:

                           (a)         Accuracy of Representations and
Warranties.  The representations and warranties of the Purchaser contained in
Article IV of this Agreement shall be true and correct in all material respects
on and as of the Closing Date as though made on and as of that date (except for
those representations and warranties that specifically relate to an earlier
date, which shall be true and correct in all material respects as of such
earlier date) and the Purchaser shall have so certified to the Parent and the
Seller in writing.

                           (b)        Compliance with Covenants.  The Purchaser
shall have performed and complied in all material respects with all terms,
agreements, covenants and conditions of this Agreement to be performed or
complied with by the Purchaser at or prior to the Closing, and the Purchaser
shall have so certified to the Parent and the Seller in writing.

                           (c)         Legal Actions or Proceedings.  No legal
action or proceeding shall have been instituted by any party or threatened in
writing by any governmental department, agency or authority, in either case
seeking to restrain, prohibit, invalidate or otherwise materially affect the
consummation of the transactions contemplated hereby.

                           (d)        Purchase Price.  The Purchaser shall have
paid the Purchase Price.

                           (e)         Certificates; Documents.  The Parent and
the Seller shall have received such certificates, documents and materials as
they shall reasonably request.

                           (f)         Escrow Agreement.  The Purchaser and the
Escrow Agent shall have entered into the Escrow Agreement.

                           (g)        Transition Services Agreement. The
Purchaser shall have entered into the Transition Services Agreement.

                           (h)        Actions and Proceedings.  Prior to the
Closing, all actions, proceedings, instruments and documents required to carry
out the transactions contemplated hereby or incident hereto and all other legal
matters required for such transactions shall have been reasonably satisfactory
to counsel for the Parent and the Seller.

             Section 6.03     Condition Precedent to the Obligations of the
Seller and the Purchaser.  The obligation of the Seller and the Purchaser to
consummate the sale and transfer of the Shares contemplated by this Agreement is
subject to the condition that the Parent shall have received an opinion
addressed to its Board of Directors that the consideration to be received by the
Parent from the Purchaser in connection with the transaction is fair as to the
Parent from a financial point of view.

ARTICLE VII
SURVIVAL; INDEMNIFICATION

             Section 7.01     Survival.  The representations, warranties,
covenants and agreements contained herein shall survive the Closing and any
investigation made by the Purchaser, the Seller or the Parent.  No action for a
breach of the representations and warranties contained herein, or any covenant
contained herein to be performed prior to the Closing Date, shall be brought
more than one year following the Closing Date, except for (a) claims arising out
of the representations and warranties contained in Sections 2.01(d), 2.01(g)
(Capitalization of the Subsidiaries), 2.04 (Capitalization of the Company),
2.12(c) (Indebtedness), 2.17 (Taxes) and 2.23 (Related Party Transactions) and
the covenants contained in Article V (except Section 5.01) (collectively, the
“Specified Representations and Covenants”), which shall not be brought after the
expiration of the applicable statute of limitations, (b) claims of which the
Seller has been notified with reasonable specificity by the Purchaser, or claims
of which the Purchaser has been notified with reasonable specificity by the
Seller, within such one-year period and (c) claims arising out of fraud by
Parent or Seller.

             Section 7.02     Limits on Claims.  If the Closing occurs, the
Purchaser shall not be entitled to recover any damages for a breach of the
representations and warranties contained in Article 2 or for the breach of any
covenant to be performed prior to the Closing unless and until the Purchaser’s
aggregate claims therefor exceed $50,000, at which time the Purchaser shall be
entitled to receive damages for all claims in excess of the $50,000 threshold. 
In addition, the aggregate recovery of Purchaser for all claims under this
Agreement shall not exceed $3,000,000, other than claims arising out of breach
of the Specified Representations and Covenants and in respect of claims arising
out of fraud by Parent or Seller.  In the case of a breach of a Specified
Representation and Covenant, the aggregate liability of Parent and Seller to
Purchaser, together with any liability for breach of any other of the
representations, warranties and covenants of Parent and Seller under this
Agreement shall not exceed the Purchase Price, except for any breach of
representation or warranty or obligation under any covenant concerning Taxes for
which there shall be no limit.  In addition, Parent and Seller shall not have
any liability for damages resulting from a breach of a representation or
warranty if both (i) Parthenon Capital, LLC or any of the owners, members,
managers or principals of Parthenon Capital, LLC (which in any event shall
include Mr. Scott Steele) had actual knowledge of the breach or inaccuracy of
the representation or warranty on or prior to the Closing Date and (ii) none of
the Seller, the Parent or the Company had actual knowledge of such breach or
inaccuracy on or prior to the Closing Date.

             Section 7.03     Indemnification by the Company and the Sellers. 
Subject to any applicable limitations set forth in Sections 7.01 and 7.02, the
Parent, the Seller and the Company hereby jointly and severally indemnify and
hold the Purchaser harmless from and against all claims, liabilities,
obligations, costs, damages, losses and expenses of any nature (including
reasonable attorneys fees) (“Damages”) arising out of or relating to (a) any
breach of the representations, warranties, covenants or agreements of the Parent
or the Seller set forth herein, (b) the failure of any portion of the Closing
Debt to be paid or otherwise satisfied at Closing, (c) the failure of the
Company and the Subsidiaries to have at least $1,723,000 of net working capital
(defined as the excess of current assets over current liabilities, without
giving effect to the transactions at or related to the Closing, any capital
infusion by the Purchaser or any write-up of assets), determined as of
immediately prior to Closing in accordance with GAAP, (d) the Leases or (e) a
breach of fiduciary duty with respect to the Network Health Services, Inc.
401(k) Profit Sharing Plan occurring before the Closing Date.  After the
Closing, all indemnification obligations will be the responsibility of the
Parent and the Seller, and the Company shall have no liability for any breach of
representations, warranties or covenants.

             Section 7.04     Indemnification by the Purchaser.  The Purchaser
hereby indemnifies and holds Parent and the Seller harmless from and against all
Damages arising out of or relating to any breach of the representations,
warranties, covenants or agreements of the Purchaser set forth herein.

             Section 7.05     Indemnification Procedure.

                           (a)         Third Party Claims.

                           (i)          Each indemnified party shall, with
reasonable promptness after obtaining knowledge thereof, provide any
indemnifying party against whom a claim for indemnification is to be made under
this Article VII with written notice of all third party actions, suits,
proceedings, claims, demands or assessments that may be subject to the
indemnification provisions of this Article VII (collectively, “Third Party
Claims”), including, in reasonable detail, the basis for the claim, the nature
of Damages and a good faith estimate of the amount of Damages.

                           (ii)         Each indemnifying party shall have 15
days after its receipt of the claim notice to notify the indemnified party in
writing whether the indemnifying party agrees that the claim is subject to this
Article VII and, if so, whether the indemnifying party elects, jointly with any
other indemnifying party notified under this Section to undertake, conduct and
control, through counsel of its choosing (subject to the consent of the
indemnified party, such consent not to be withheld unreasonably) and at its or
their sole risk and expense, the good faith settlement or defense of the Third
Party Claim.

                           (iii)        If within 15 days after its receipt of
the claim notice an indemnifying party notifies the indemnified party that it
elects to undertake the good faith settlement or defense of the Third Party
Claim, the indemnified party shall cooperate reasonably with the indemnifying
party in connection therewith including, without limitation, by making available
to the indemnifying party all relevant information material to the defense of
the Third Party Claim.  The indemnified party shall be entitled to participate
in the settlement or defense of the Third Party Claim through counsel chosen by
the indemnified party, at its expense, and to approve any proposed settlement
that would impose any obligation or duty on the indemnified party, which
approval may, in the sole discretion of the indemnified party, be withheld.  So
long as an indemnifying party is contesting the Third Party Claim in good faith
and with reasonable diligence, the indemnified party shall not pay or settle the
Third Party Claim.  Notwithstanding the foregoing, the indemnified party shall
have the right to pay or settle any Third Party Claim at any time, provided that
in such event it waives any right to indemnification therefor by the
indemnifying party.

                           (iv)       If an indemnifying party does not provide
notice that it elects to undertake the good faith settlement or defense of the
Third Party Claim, or if an indemnifying party fails to contest the Third Party
Claim or undertake or approve settlement, in good faith and with reasonable
diligence, the indemnified party shall thereafter have the right to contest,
settle or compromise the Third Party Claim at its exclusive discretion, at the
risk and expense of the indemnifying party, and the indemnifying party will
thereby waive any claim, defense or argument that the indemnified party’s
settlement or defense of such Third Party Claim is in any respect inadequate or
unreasonable.

                           (v)        A party’s failure to give timely notice
will not constitute a defense, in part or in whole, to any claim for
indemnification by such party, except if, and only to the extent that, such
failure results in any material prejudice to the indemnifying party.

                           (b)        Non-Third Party Claims.

                           (i)          Each indemnified party shall, with
reasonable promptness, deliver to any indemnifying party against whom a claim
for indemnification is to be made under this Article VII written notice of all
claims for indemnification under this Article VII, other than Third Party
Claims, including, in reasonable detail, the basis for the claim, the nature of
Damages and a good faith estimate of the amount of Damages.

                           (ii)         Each indemnifying party shall have 30
days after its receipt of the claim notice to notify the indemnified party in
writing whether the indemnifying party accepts liability for all or any part of
the Damages described in the claim notice.  If the indemnifying party does not
so notify the indemnified party, the indemnifying party shall be deemed to
accept liability for all the Damages described in the claim notice.

                           (iii)        A party’s failure to give timely notice
will not constitute a defense, in part or in whole, to any claim for
indemnification by such party, except if, and only to the extent that, such
failure results in any material prejudice to the indemnifying party.

ARTICLE VIII
TERMINATION OF AGREEMENT

             Section 8.01     Termination of Agreement Prior to Closing.  This
Agreement may be terminated and the sale and transfer of the Shares contemplated
hereby may be abandoned at any time prior to the Closing:

                           (a)         by the mutual written consent of the
Parent, the Seller and the Purchaser;

                           (b)        by either (A) the Purchaser if there shall
have been a material breach of any of the representations, warranties, covenants
or agreements of the Parent and/or the Seller contained in this Agreement or (B)
the Parent and the Seller if there shall have been a material breach of any of
the representations, warranties, covenants or agreements of the Purchaser
contained in this Agreement, in either case, only if (x) such breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 6.01 (in the case of a breach by the Parent and/or the Seller) or
Section 6.02 (in the case of a breach by the Purchaser) and (y) such breach (1)
by its nature is not capable of being cured or (2) shall not have been cured
within 15 days after written notice thereof shall have been given by the
terminating parties to the party or parties alleged to be in breach; or

                           (c)         by either the Purchaser, on the one hand,
or the Parent and the Seller, on the other hand, if the Closing shall not have
occurred prior to the close of business on August 31, 2001, provided that (A)
the right to terminate this Agreement under this Section 8.01(c) shall not be
available to the Purchaser if any breach of the representations, warranties,
covenants or agreements of the Purchaser contained in this Agreement then exists
and (B) the right to terminate this Agreement under this Section 8.01(c) shall
not be available to the Parent and the Seller if any breach of the
representations, warranties, covenants or agreements of the Parent and/or the
Seller contained in this Agreement then exists.

             Section 8.02     Method and Effect of Termination.

                           (a)         Any party desiring to terminate this
Agreement pursuant to Section 8.01 shall give notice to each of the other
parties hereto in accordance with Section 9.03.

                           (b)        In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement, except for the provisions of
this Article VIII and Article IX, shall become void and have no further effect,
with no liability on the part of any party hereto or its partners, directors,
officers or stockholders, provided that nothing in this Section 8.02 or in that
certain Non-Solicitation Agreement dated as of June 26, 2001 by and between
Parthenon Capital and the Parent (the “Non-Solicitation Agreement”) shall
relieve any party of liability under this Agreement for a breach of any
provision hereof occurring prior to such termination, and provided further that
nothing herein shall relieve any party for any willful breach of this Agreement.

ARTICLE IX
MISCELLANEOUS

             Section 9.01     Expenses, Etc.  All costs and expenses, including
fees and disbursements of counsel, advisors, accountants and consultants,
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement, the Ancillary Agreements and the closing of the transactions
contemplated hereby and thereby (collectively, “Expenses”) shall be paid by the
party incurring such Expenses, whether or not the transactions contemplated by
this Agreement are consummated (except as provided in the Non-Solicitation
Agreement), provided, however, that all Expenses incurred by the Company shall
be borne by the Parent and the Seller.  In the event of a termination of this
Agreement pursuant to Section 8.01, the obligation of each party to pay its own
Expenses shall be subject to any rights that such party may have arising out of
a breach of this Agreement by any other party or parties hereto.

             Section 9.02     Execution in Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

             Section 9.03     Notices.  All notices, requests, instructions and
other documents that are required to be or may be given or delivered pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if delivered by hand or national overnight courier service, transmitted
by facsimile (confirmed by another method of delivery permitted hereunder) or
mailed by registered or certified mail, postage prepaid, as follows:

 

  if to either the Parent or the Seller, to it at:         224 West 30th Street
    New York, NY  10001     Attention:  Mark Boulding, General Counsel    
Facsimile:  (212) 760-3222     With an electronic copy to: 
legal@medscapeinc.com         with a copy to:         Stoel Rives LLP     900 SW
Fifth Avenue, Suite 2600     Portland, OR  97204-1268     Attention:  John
Schweitzer, Esq.     Facsimile:  (503) 220-2480     With an electronic copy to:
jmschweitzer@stoel.com         if to the Purchaser to it at:         TEM
Holdings, LLC     c/o Parthenon Capital, Inc.     200 State Street     Boston,
MA  02109     Attention:  Scott Steele     Facsimile:  (617) 478-7010     With
an electronic copy to: scotts@parthenoncapital.com         with a copy to:      
  Choate, Hall & Stewart     Exchange Place     53 State Street     Boston, MA 
02109     Attention:  Stephen M. L. Cohen, Esq.     Facsimile:  (617) 248-4000  
  With an electronic copy to: scohen@choate.com

 

or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.  Such notices, requests,
instructions and other documents shall be deemed given or delivered (i) five
business days following sending by registered or certified mail, postage
prepaid, (ii) one business day following sending by national overnight courier
service, (iii) when sent, if sent by facsimile (but only if such facsimile is
promptly confirmed by such other method of delivery) or (iv) when delivered, if
delivered by hand.

             Section 9.04     Waivers.  The Parent and the Seller, on the one
hand, and the Purchaser, on the other hand, may, by written notice to the other,
(i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
document delivered pursuant to this Agreement; (iii) waive compliance with any
of the conditions or covenants of the other contained in this Agreement; or (iv)
waive performance of any of the obligations of the other under this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation any investigation by or on behalf of the
Parent and the Seller, on the one hand, and the Purchaser, on the other hand,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.  The waiver by the Parent and the Seller, on the
one hand, and the Purchaser, on the other hand, of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.

             Section 9.05     Amendments, Supplements, Etc.  At any time this
Agreement may be amended or supplemented by such additional agreements, articles
or certificates as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate the consummation of any of the
transactions contemplated hereby.  Any such instrument must be in writing and
signed by the Parent, the Seller and the Purchaser.

             Section 9.06     Entire Agreement.  This Agreement, its exhibits
and schedules, and the Ancillary Agreements constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and supersede
all prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof, except for the
Non-Solicitation Agreement.  The Holding Period (as defined in the
Non-Solicitation Agreement) shall extend to the later of (i) the Holding Period
as defined in the Non-Solicitation Agreement and (ii) the termination of this
Agreement.

             Section 9.07     Applicable Law; Consent to Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to conflict of laws principals thereof.

             Section 9.08     Further Assurances.  The parties hereto agree (i)
to furnish upon request to each other such further information, (ii) to execute
and deliver to each other such other documents and (iii) to do or cause to be
done such other acts and things, all as the other parties hereto may from time
to time reasonably request for the purpose of carrying out the intent of this
Agreement and the Ancillary Agreements.

             Section 9.09     Interpretation.

                           (a)         As used herein, the words “hereof”,
“herein”, “herewith” and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and the words “Article”, “Section” and “Schedule”
references are to the articles, sections and schedules of this Agreement unless
otherwise specified.  Whenever the words “include”, “includes” or “including”
are used in this Agreement they shall be deemed to be followed by the words
“without limitation”.  The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.  Any
agreement, instrument or statute defined or referred to herein means such
agreement, instrument or statute as from time to time amended, qualified or
supplemented, including (in the case of agreements and instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes.  References to a person are also to its successors and permitted
assigns.

                           (b)        The parties have participated jointly in
the negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.

             Section 9.10     Binding Effect; Benefits.  This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

             Section 9.11     Assignability.  Neither this Agreement nor any of
the parties’ rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto.

             Section 9.12     Release.  Effective as of the Closing, the Parent,
the Seller and the Affiliates each release the Company and the Subsidiaries,
from any and all claims, liabilities, obligations, damages, expenses and other
amounts of every kind or description arising or existing prior to the Closing
Date, except that this release shall not apply as specifically set forth
herein.  In addition, effective as of the Closing, Parent, Seller and the
Affiliates each release the officers, directors and employees of the Company and
the Subsidiaries from obligations to or agreements with Parent, Seller or the
Affiliates that, if enforced, would materially interfere with such individual’s
ability to conduct the business of the Company and the Subsidiaries after
Closing.

             Section 9.13     Schedules.  Disclosure by Parent, Seller or the
Company of any fact or item in any schedule hereto shall be deemed to have been
disclosed in any other schedule hereto made by Parent, Seller or the Company,
provided that disclosure of such fact or item on such schedule contains fair
disclosure of the facts that would otherwise be required to be disclosed in such
other schedule.  In the view of the Parent and the Seller, matters reflected in
the schedules hereto are not necessarily limited to matters required by this
Agreement to be disclosed.  Such additional matters are provided for information
purposes only.

             Section 9.14     Assignment of Certain Employment Contracts.  The
parties acknowledge that certain employees of the Company or the Subsidiaries
inadvertently entered into employment agreements with the Parent or the Seller
rather than the Company or a Subsidiary.  Effective as of the Closing, the
Parent and the Seller will be deemed to have assigned to the Company all of
their rights under the employment agreements between the Parent or the Seller
and any employee of the Company or any Subsidiary, including without limitation
all rights which may have arisen at any time under any assignment of invention
or similar provisions contained in such agreements.

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             IN WITNESS WHEREOF, this Stock Purchase Agreement has been duly
executed and delivered by the parties hereto as of the date first above written.

  THE PARENT:       MEDICALOGIC/MEDSCAPE, INC.           By    

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    Name:     Title:           THE SELLER:         MEDSCAPE ENTERPRISES, INC.  
        By    

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    Name:     Title:           THE PURCHASER:         TEM HOLDINGS, LLC        
  By    

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    Name:     Title: