CONFIDENTIAL
LETTER OF INTENT


 


 


November
5, 2019


 


Accountable
Healthcare America Inc.

2455 East Sunrise Blvd. Suite 1204


Fort
Lauderdale, Florida FL, 33304


Attention:
Fred Sternberg, Chief Executive Officer





Dear
Mr. Sternberg:


 


This
Confidential Letter of Intent (“LOI”) sets forth the principal business points for the proposed transactions
described herein (the “Transactions”) between Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”),
on one hand, and Accountable Healthcare America Inc., a Delaware corporation (“AHA”), on the other hand, under
which Clinigence and AHA will combine and expand their respective businesses.


 


		1.	Transactions.



 


		a.	Merger.
                                         Clinigence shall issue newly-issued shares of capital stock, on a fully-diluted pro rata
                                         basis, to the equity holders of AHA in exchange for 100% of the outstanding equity securities
                                         of AHA by means of a reverse triangular merger in which a newly formed wholly owned subsidiary
                                         of Clinigence shall merge with and into AHA, with AHA continuing as the surviving corporation
                                         (the “Merger”). If the closing of
                                         the Merger occurs (the “Closing”), the former AHA equityholders shall
                                         own 80% of Clinigence’s issued and outstanding capital stock and the former Clinigence
                                         equityholders shall own 20% of Clinigence’s issued and outstanding capital stock,
                                         in each case on a fully-diluted, as converted basis as of immediately prior to
                                         the Closing (including options, warrants and other rights to acquire equity securities
                                         of Clinigence). To the extent necessary, Clinigence shall increase the authorized number
                                         of shares and shall authorize a new series or class of shares to complete the issuance
                                         of shares set forth in the first sentence of this Section 1(a). In connection
                                         with the Merger, all outstanding indebtedness of Clinigence shall be: (i) paid or discharged
                                         in full immediately prior to Closing, (ii) remain outstanding following the Closing,
                                         (iii) worked out with payment plans prior to Closing, and/or (iv) converted to common
                                         stock of Clinigence prior to Closing, in each case, as mutually agreed to per the Definitive
                                         Agreements (defined below)



 


		b.	Change
                                         of Name and Ticker Symbol. Following the Closing, Clinigence will change its name
                                         to a new name that is mutually acceptable to Clinigence and AHA and apply to the Financial
                                         Industry Regulatory Authority (“FINRA”) to change its ticker symbol.



 






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		2.	Corporate
                                         Governance.



 


		a.	Board.
                                         Following the Closing, the board of directors of Clinigence shall consist of nine individuals,
                                         five of whom shall be appointed by AHA and four of whom shall be appointed by Clinigence
                                         and a majority of whom shall be independent.



 


Each
new director shall enter into mutually agreeable director and indemnification agreements with Clinigence, and Clinigence shall
obtain and maintain D&O insurance acceptable to the directors.


 


		b.	Officers.
                                         Following the Closing, the following individuals shall hold the following officer positions
                                         of Clinigence:



 


	CEO:	Fred Sternberg/Warren Hosseinion
	Executive Chairman:	Fred Sternberg/Warren Hosseinion
	Co-President:	Jacob Margolin
	Co-President:	Andrew Barnett
	COO:	Elisa Luqman
	CMO:	Hymin Zucker
	CMIO:	Lawrence Schimmel
	Chief Financial Officer:	Mike Bowen
	VP Finance/Controller:	Eddie Fernandez




 


		3.	Definitive
                                         Agreements. Clinigence counsel shall prepare a draft merger agreement (such merger
                                         agreement and any other definitive agreements, the “Definitive Agreements”)
                                         containing representations, warranties, closing conditions customary for transactions
                                         similar to the proposed Transactions. The Definitive Agreements will also include a break-up
                                         fee in an amount to be agreed if Clinigence or AHA were to accept a superior offer and
                                         terminate the Definitive Agreements. The Closing shall occur as soon as reasonably practical.
                                         The AHA control persons reasonably requested by Clinigence shall irrevocably agree to
                                         vote for the Merger and not tender shares to an alternative proposal as long as the Definitive
                                         Agreements remain in effect. Such AHA control persons shall also provide representations
                                         and warranties relating to their equity ownership of AHA and those representations and
                                         warranties set forth in the below Section 4 with respect to AHA.



 


		4.	Representations
                                         and Warranties. The Definitive Agreements shall contain customary representations
                                         and warranties by the parties, including but not limited to: (a) organization, qualification
                                         and corporate power, (b) non-contravention, (c) capitalization (including that all
                                         equity issuances by Clinigence or AHA, as applicable, and equity rights granted by Clinigence
                                         or AHA, as applicable, have been duly authorized by Clinigence or AHA, as applicable),
                                         (d) broker’s fees, (e) title to assets, (f) subsidiaries, (g) financial statements,
                                         (h) undisclosed liabilities, (i) legal compliance, (j) real property, (k) tangible assets,
                                         (l) employees and employee benefits, (o) guaranties, (p) certain business practices,
                                         (q) parachute payments, (r) environmental, health and safety, (s) tax matters, (t) intellectual
                                         property, (u) notes and accounts receivable, (v) litigation, (w) affiliate transactions,
                                         (x) required consents, and (y) ownership of shares.



 






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		5.	Conditions
                                         to Closing. The Definitive Agreements shall contain customary closing conditions,
                                         including but not limited to:



 


		a.	Accuracy
                                         and completeness of representations and warranties at signing and Closing in all material
                                         respects (or, if qualified by materiality or material adverse effect, in all respects).



 


		b.	Performance
                                         of covenants.



 


		c.	Absence
                                         of action challenging or prohibiting the transaction.



 


		d.	No
                                         material adverse effect will have occurred.



 


		e.	All
                                         material third-party consents, permits, licenses and other approvals identified in due
                                         diligence will have been obtained.



 


		f.	Requisite
                                         corporate approval of Clinigence and AHA of all transaction documents.



 


		g.	The
                                         parties will have prepared a draft 8-K in a form reasonably satisfactory to Clinigence,
                                         to be filed immediately following Closing.



 


		h.	Clinigence
                                         will have obtained all required FINRA approvals related to the Transactions.



 


		i.	Clinigence
                                         will have obtained a satisfactory fairness opinion.



 


		j.	Subject
                                         to any listing requirements of Nasdaq or NYSE American requiring additional years of
                                         audited financial statements, AHA will have completed two (2) years of audited financial
                                         statements.



 


		k.	The
                                         holders of that percentage of outstanding shares of AHA as mutually agreed by the parties
                                         will have entered into lock up agreements in form and substance satisfactory to Clinigence
                                         and AHA.



 


		6.	Post-Closing
                                         Covenants. The Definitive Agreements will provide that Clinigence will use its commercially
                                         reasonable efforts to (i) cause its shares to become listed on Nasdaq or NYSE American
                                         at or as soon as practicable following Closing and take all steps commercially practicable
                                         for that purpose, and (ii) register the shares of Clinigence stock held by stockholders
                                         immediately following Closing as soon as practicable following Closing.



 






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		7.	No-Shop.
                                         For 90 days after the date that this LOI becomes effective (the “No-Shop
                                         Period”), neither AHA, Clinigence nor any of their respective officers, directors,
                                         representatives, advisors, investment bankers, agents or affiliates shall, directly or
                                         indirectly, (a) solicit, negotiate, initiate or encourage submission of any proposal
                                         to enter into an Alternative Transaction (as defined below), (b) enter into any agreement
                                         with respect to an Alternative Transaction, (c) participate in any discussions or negotiations
                                         that may reasonably be expected to lead to an Alternative Transaction, or (d) furnish
                                         any information to any person to facilitate the making of an Alternative Transaction,
                                         or permit any person under its control to do any of the foregoing. An “Alternative
                                         Transaction” shall mean a transaction in which (i) a person or group acquires,
                                         directly or indirectly, securities representing 30% or more of the voting power of the
                                         outstanding securities of AHA or Clinigence, as applicable, or properties or assets constituting
                                         30% or more of the consolidated assets of AHA and its subsidiaries or Clinigence and
                                         its subsidiaries, as applicable, or (ii) (A) AHA or Clinigence, as applicable, issues
                                         securities representing 30% or more of its total voting power, including in the case
                                         of (i) and (ii) by way of merger or other business combination with AHA or any of
                                         its subsidiaries or Clinigence or any of its subsidiaries, as applicable, or (B) AHA
                                         or Clinigence, as applicable, engages in a merger or other business combination such
                                         that the holders of voting securities of AHA or Clinigence, respectively, immediately
                                         prior to the transaction do not own more than 50% of the voting power of securities of
                                         the resulting entity. During the No-Shop Period, AHA and Clinigence shall each continue
                                         to operate its business in good faith and in the ordinary course of business consistent
                                         with past practice, and AHA and Clinigence shall provide the other party with written
                                         notice within 24 hours of receipt by AHA or any of its representatives or by Clinigence
                                         or any of its representatives, as applicable, of any offer, inquiry or request for information
                                         relating to any potential proposal to acquire the assets or equity of AHA or Clinigence,
                                         as applicable.



 


		8.	Termination
                                         Fee. In the event that either Clinigence or AHA terminates this LOI prior to the
                                         Expiration Date (as defined below) for any reason other than Cause or a Subsequently
                                         Discovered Adverse Condition (as such terms are defined below), such terminating party
                                         shall promptly (and in any event within two business days) following such termination
                                         pay $100,000 (the “Termination Fee”)
                                         to the non-terminating party. “Cause” shall mean (i) a material breach
                                         by the non-terminating party of the terms of the LOI that, if curable, has not been cured
                                         within 10 days after the non-terminating party has received notice from the terminating
                                         party of such breach, or (ii) fraud, gross negligence or willful misconduct by the
                                         non-terminating party. The parties hereto acknowledge that (i) the agreements contained
                                         in this Section 7 are an integral part of the transactions contemplated by this
                                         LOI, (ii) the Termination Fee is not a penalty, but is liquidated damages, in a reasonable
                                         amount that will compensate the non-terminating party in the circumstances in which the
                                         Termination Fee is payable for the efforts and resources expended and opportunities foregone
                                         while negotiating the Transaction and in reliance on this LOI and on the expectation
                                         of the consummation of the Transactions, which amount would otherwise be impossible to
                                         calculate with precision, and (iii) without these agreements, the parties would not enter
                                         into this LOI.



 






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		9.	Confidentiality.
                                         The parties agree that this LOI and its provisions are subject to that certain Master
                                         Mutual Non-Disclosure Agreement, dated August 9, 2019,
                                         by and between AHA and Clinigence (the “NDA”).



 


		10.	Expenses.
                                         Clinigence and AHA shall each bear their own respective transaction expenses, including
                                         fees and expenses of legal counsel, investment bankers and other advisors, incurred in
                                         connection with the proposed Transactions.



 


		11.	Expiration.
                                         This LOI, once executed by the parties, will expire at the close of business at 5:00
                                         pm EDT on January 31, 2020 (the “Expiration Date”), unless mutually
                                         terminated by AHA and Clinigence or if it is terminated by a party (i) for Cause
                                         as defined herein or (ii) upon the discovery by the terminating party during pre-Merger
                                         diligence of information regarding the non-terminating party that would reasonably have
                                         a material adverse effect on the Transactions and that the terminating party did not
                                         have knowledge of as of the date of this LOI (a “Subsequently Discovered Adverse
                                         Condition”).



 


		12.	Entire
                                         Agreement. This LOI, together with the NDA, and any documents, instruments and certificates
                                         explicitly referred to herein and therein, constitutes the entire agreement among the
                                         parties with respect to the subject matter hereof and supersedes any and all prior discussions,
                                         negotiations, proposals, undertakings, understandings and agreements, whether written
                                         or oral, with respect thereto. There are no restrictions, promises, warranties, covenants,
                                         or undertakings, other than those expressly provided for herein and therein.



 


		13.	Governing
                                         Law and Jurisdiction. This LOI is to be construed in accordance with and governed
                                         by the laws of the State of Delaware, without giving effect to any choice of law rule
                                         that shall cause the application of the laws of any jurisdiction other than the laws
                                         of the State of Delaware to the rights and duties of the parties.



 


		14.	Binding
                                         Effect. This LOI constitutes a binding agreement between Clinigence and AHA solely
                                         with respect to Section 7 (No-Shop), Section 8 (Termination Fee), Section
                                         9 (Confidentiality), Section 10 (Expenses), Section 11 (Expiration),
                                         Section 12 (Entire Agreement), Section 13 (Governing Law and Jurisdiction)
                                         and this Section 14 (No Binding Effect); but otherwise does not constitute a binding
                                         agreement or offer by any party hereto or any of its affiliates to consummate the Transactions,
                                         or enter into any Definitive Agreement. No contract, agreement, obligation, commitment
                                         or liability with respect to the proposed Transactions or any other transaction shall
                                         exist or be deemed to exist by virtue of this LOI, any other written or oral expression
                                         with respect to the proposed Transactions or otherwise, unless and until the parties
                                         have completed negotiations and obtained corporate approvals for, and have executed and
                                         delivered, the Definitive Agreements. For the purposes of this LOI, the term “Definitive
                                         Agreements” shall not include any written or oral acceptance of any offer or bid,
                                         any term sheet or any letter of intent or other written expression of AHA’s or
                                         Clinigence’s intentions to negotiate or enter into a definitive merger agreement.



 


(Signatures
on the following the page)









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If
you are in agreement with the terms set forth above and desire to proceed with the proposed Merger on that basis, please sign
this LOI in the space provided below and return a fully executed copy by email to kobi.margolin@clinigence.com.


 


Sincerely,


 


	CLINIGENCE HOLDINGS, INC.	 
	 	 
	 	 
	By: /s/ Jacob Margolin	Date: 11/6/19
	Name: Jacob Margolin	 
	Title: Chief Executive Officer	 
	 	 
	 	 
	By: /s/ Warren Hosseinion	Date: 11/5/19
	Name: Warren Hosseinion, M.D.	 
	Title: Chairman of the Board of Directors	 
	 	 
	 	 
	ACCEPTED AND AGREED:	 
	 	 
	Accountable Healthcare America Inc.	 
	 	 
	 	 
	By: /s/ Fred Sternberg	Date: 11/8/19
	Name: Fred Sternberg	 
	Title: Chief Executive Officer	




 


 



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