Document:

20170120 Exhibit 10.1

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA
		

		
			﻿
		

		
			 
		

		
			BEAVER COUNTY EMPLOYEES'          )  Case No. 0:14-cv-00786-ADM-TNL
		

		
			RETIREMENT  FUND; ERIE COUNTY     )  
		

		
			EMPLOYEES' RETIREMENT SYSTEM;  )  CLASS ACTION
		

		
			and LUC DE WULF, Individually and on    )  
		

		
			Behalf of All Others Similarly Situated,)
		

		
			)
		

		
			Plaintiffs,)
		

		
			)
		

		
			vs.)
		

		
			)
		

		
			TILE SHOP HOLDINGS, INC.; ROBERT)  
		

		
			A. RUCKER; THE TILE SHOP, INC.;      )  
		

		
			TIMOTHY C. CLAYTON; PETER J. )  
		

		
			JACULLO III; JWTS, INC.; PETER H.      )  
		

		
			KAMIN; TODD KRASNOW; ADAM L. )  
		

		
			SUTTIN; WILLIAM E. WATTS; )  
		

		
			ROBERT W. BAIRD & CO.                       )  
		

		
			INCORPORATED; CITIGROUP               )
		

		
			GLOBAL MARKETS INC.; CJS                )
		

		
			SECURITIES, INC.; HOULIHAN LOKEY)  
		

		
			CAPITAL, INC.; PIPER JAFFRAY &         )  
		

		
			CO.; SIDOTI & COMPANY, LLC;              )
		

		
			TELSEY ADVISORY GROUP LLC; and      ) 
		

		
			WEDBUSH SECURITIES, INC.,  )
		

		
			                                                                                     )
		

		
			Defendants. )
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			STIPULATION OF SETTLEMENT
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			 
		

		
			TABLE OF CONTENTS
		

		
			
		

		
			﻿
		

		
			Page
		

		
			 
		

		
			﻿
		

		
			I. DESCRIPTION OF THE ACTION ........................................................................... 1
		

		
			﻿
		

		
			II. CLAIMS OF THE LEAD PLAINTIFFS AND THE BENEFITS OF
		

		
			SETTLEMENT TO THE CLASS .............................................................................. 3
		

		
			﻿
		

		
			III. DEFENDANTS' DENIALS OF WRONGDOING AND REASONS FOR 
		

		
			SETTLEMENT........................................................................................................... 4
		

		
			﻿
		

		
			IV. TERMS OF THE STIPULATION ............................................................................. 5
		

		
			﻿
		

		
			A. Definitions ....................................................................................................... 5
		

		
			﻿
		

		
			B. The Court's Order Preliminarily Approving The Settlement And
		

		
			Providing For Notice And Settlement Hearing ............................................... 12
		

		
			﻿
		

		
			C. Releases ........................................................................................................... 16
		

		
			﻿
		

		
			D. Judgment To Be Entered By The Court Approving The Settlement .............. 17
		

		
			﻿
		

		
			E. The Settlement Fund........................................................................................ 19
		

		
			﻿
		

		
			F. Administration And Calculation Of Claims, Final Awards, And Supervision
		

		
			And Distribution Of The Settlement Fund ...................................................... 22
		

		
			﻿
		

		
			G. The Fee And Expense Petition ........................................................................ 26
		

		
			﻿
		

		
			H. Conditions Of Settlement; Effect Of Disapproval, Cancellation And
		

		
			Termination ..................................................................................................... 27
		

		
			﻿
		

		
			I. No Admissions ................................................................................................ 30
		

		
			﻿
		

		
			J. Miscellaneous Provisions ................................................................................ 31
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			EXHIBITS
		

		
			﻿
		

			
					
						Exhibit A:

					
					
						Order Preliminarily Approving Settlement and Providing for Notice and Settlement Hearing

				
	
					
						Exhibit A-1:

					
					
						Notice of Class Action Determination, Proposed Settlement, and Hearing on Settlement

				
	
					
						Exhibit A-2:

					
					
						Summary Notice of Class Action Determination, Proposed Settlement, and Hearing on Settlement

				
	
					
						Exhibit A-3:

					
					
						Proof of Claim and Release Form

				
	
					
						Exhibit B:

					
					
						Order for Final Judgment

				

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			US.l09306594 04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			STIPULATION OF SETTLEMENT
		

		
			﻿
		

		
			This Stipulation of Settlement ("Stipulation") is made as of January 13,
		

		
			﻿
		

		
			﻿
		

		
			2017, by and among the following parties: (1) Beaver County Employees'  Retirement Fund, Erie County Employees' Retirement System, and Luc DeWulf (collectively, the "Lead Plaintiffs"),  on behalf of themselves and the Court-certified Class, by and through Class Counsel in this Action; and (2) Tile Shop Holdings, Inc. ("Tile Shop"), Robert A. Rucker, The Tile Shop, Inc., Timothy C. Clayton, Peter J. Jacullo III, JWTS, Inc., Peter H. Kamin, Todd Krasnow, Adam L. Suttin, William E. Watts, Robert W. Baird & Co. Incorporated, Citigroup Global Markets Inc., CJS Securities, Inc., Houlihan Lokey Capital, Inc., Piper Jaffray & Co., Sidoti & Company, LLC, Telsey Advisory Group
		

		
			LLC, and Wedbush Securities, Inc. (collectively, the "Defendants"), by and through their attorneys in this Action. 1
		

		
			I. DESCRIPTION OF THE ACTION
		

		
			﻿
		

		
			In November 2013, two class action lawsuits were commenced against Tile Shop and certain of the Defendants in the United States District Court for the Southern District of New York.  By Order entered on March 13, 2014, the two lawsuits were transferred to the United States District Court for the District of Minnesota (the "Court"). The two lawsuits subsequently were consolidated as Case No. 0:14-cv-00786-ADM-TNL under the caption Beaver County Employees' Retirement Fund, et al. v. Tile Shop
		

		
			﻿
		

		
			1    All  terms  with  initial  capitalization   not  otherwise  defined  herein  shall  have  the meanings ascribed to them in ¶  IV(A) herein.  All claims against Piper Jaffray  &Co. and CJS Securities, Inc. have been dismissed.   Nevertheless, for purposes  of the settlement, they have been included among the Defendants.
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Holdings, Inc., et al. (the "Action"), and Lead Plaintiffs and Co-Lead Counsel were appointed.
		

		
			On May 23, 2014, Lead Plaintiffs served and filed a Consolidated Amended Complaint for Violations of the Federal Securities Laws ("Consolidated Complaint"), which asserted claims against all Defendants.  Specifically, the Consolidated Complaint alleged violations of: (i) Sections 11 and 12(a)(2) of the Securities Act of 1933 against all of the Defendants, and (ii) Sections 10(b) and 20(a) of
		

		
			the Securities Exchange Act of 1934 against certain of the Defendants.  On July 25, 2014, Defendants moved to dismiss the Consolidated Complaint.  By Memorandum Opinion
		

		
			and Order entered on March 4, 2015, the Court granted Defendants'  motions to dismiss in part, and denied them in part.
		

		
			Thereafter the Parties engaged in substantial discovery, including document production, depositions, and subpoenas to non-parties.  The Parties also exchanged
		

		
			reports of their experts, and took expert depositions.
		

		
			﻿
		

		
			On December 1, 2015, Lead Plaintiffs moved for class certification, which Defendants opposed.  By Order entered on July 28, 2016, the Court granted Lead Plaintiffs' motion for class certification, certifying the Class and appointing Lead Plaintiffs as Class Representatives and Co-Lead Counsel as Class Counsel.   Lead Plaintiffs have not yet sent class notice.
		

		
			On October 14, 2016, Defendants filed motions for summary judgment and also filed motions to exclude the opinions of Lead Plaintiffs' experts.   Also on October
		

		
			14, 2016, Lead Plaintiffs filed a motion for partial summary judgment and a motion to
		

		
			﻿
		

		
			2
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			exclude the opinions of Defendants'  experts.   Those motions have not been decided. Trial is set for March 13, 2017.
		

		
			Over the course of the Action, the Parties have participated in three mediations and have exchanged multiple mediation statements.  Following the completion of fact and expert discovery, and with trial approaching, the Parties agreed to participate in their third mediation, conducted by JAMS Endispute mediator, the Honorable Daniel H. Weinstein (ret.), on December 6, 2016.  During this mediation, the Parties were able to reach agreement to settle this Action.  At the request of the Parties, the Court suspended certain deadlines so that the Court can consider the settlement described in this Stipulation.
		

		
			II. CLAIMS OF THE LEAD PLAINTIFFS AND THE BENEFITS  OF SETTLEMENT TO THE CLASS
		

		
			﻿
		

		
			Lead Plaintiffs and Class Counsel have carefully weighed the benefit to the Class of a settlement of the Action at this stage of the litigation on the terms set forth herein, against the significant cost, risk and delay that continued prosecution of the
		

		
			Action would involve.  Although Lead Plaintiffs and Class Counsel believe that the claims pursued in the Action are meritorious, they recognize the considerable risk that they may lose at summary judgment, at trial, on post-trial motions, or on appeal.  Lead Plaintiffs and Class Counsel have also taken into account the expense and delay in attempting to prosecute the Action through trial, likely post-trial motions, and appeals. Additionally, Lead Plaintiffs and Class Counsel have taken into account the difficulty in
		

		
			proving damages.  In light of the foregoing, Lead Plaintiffs and Class Counsel believe
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			3
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			that the settlement set forth in this Stipulation confers substantial and immediate benefits on the Class and is therefore in the best interest of the Class.  This Stipulation shall not be construed or deemed to be a concession by Lead Plaintiffs of any infirmity in the claims asserted in the Action.
		

		
			III. DEFENDANTS' DENIALS OF WRONGDOING  AND REASONS FOR SETTLEMENT
		

		
			﻿
		

		
			Defendants have denied and continue to deny each and all of the claims and contentions alleged in the Action.  Defendants repeatedly have asserted, and continue to assert, many defenses thereto, and have expressly denied and continue to deny any wrongdoing or legal liability arising out of any of the conduct alleged in the Action. Neither this Stipulation, nor any document referred to herein, nor any action taken to
		

		
			carry out this Stipulation, is, may be construed as, or may be used as an admission by or against Defendants of any fault, wrongdoing or liability whatsoever.
		

		
			Defendants nevertheless have concluded that the further conduct of the Action against them would be protracted and expensive.  Substantial amounts of time, energy and resources have been and, unless this settlement is made, will continue to be devoted to the defense of the claims asserted in the Action.  Defendants also recognize that there are risks attendant in any litigation.  Defendants have, therefore, determined that it is desirable and beneficial to them that the Action be settled in the manner and upon the terms and conditions set forth in this Stipulation to eliminate the burden and expense of further protracted litigation.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			4
		

		
			﻿
		

		
			US. 109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			IV.TERMS OF THE STIPULATION
		

		
			﻿
		

		
			NOW, THEREFORE, it is hereby stipulated and agreed, by and among Lead Plaintiffs (individually and on behalf of all members of the Class) and Defendants, by and through their respective counsel of record, that the Action shall be settled, subject to the approval of the Court pursuant to Fed. R. Civ. P. 23(e), upon and subject to the following terms and conditions:
		

		
			A. Definitions
		

		
			﻿
		

		
			1. "Action" means the Beaver County Employees' Retirement Fund, et al. v. Tile Shop Holdings, Inc., et al., Case No. 0:14-cv-00786-ADM-TNL, now pending in the United States District Court for the District of Minnesota, and the underlying individual actions that were consolidated into it.
		

		
			2. "Administrative Expenses" means: (a) the fees and expenses that are incurred by the Claims Administrator in connection with providing notices to the Class, and administering the settlement, including but not limited to the claims process, as addressed in ¶  IV(E)(5) of this Stipulation; (b) the fees and expenses incurred in connection with the Escrow Account; (c) Taxes; and (d) the out-of-pocket expenses incurred by the Escrow Agents in connection with determining the amount of and paying any Taxes (including, without limitation, expenses of tax attorneys and accountants).
		

		
			3. "Authorized  Claimant" means a Claimant who submits a timely and adequate Claim Form who is entitled to share in the Net Settlement Fund in accordance with the Plan of Distribution approved by the Court, and whose claim has been approved for payment by the Claims Administrator.
		

		
			5
		

		
			﻿
		

		
			US.l09306594  04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			4. "Claim Form" means the Proof of Claim and Release Form, substantially in the form attached hereto as Exhibit A-3,that a Class Member must complete and submit should that Class Member seek to share in the distribution of the Net Settlement Fund.
		

		
			5. "Claimant" means any Class Member who submits a Claim Form in such form, in such manner, and within such times as the Court shall prescribe.
		

		
			6. "Claims Administrator" means Gilardi  & Co. LLC.
		

		
			﻿
		

		
			7. "Class" means the class certified by the Court by Memorandum Opinion and Order dated July 28, 2016 and consists of all Persons who purchased or otherwise acquired Tile Shop common stock between August 22, 2012 and January 28,
		

		
			2014, inclusive, but excluding (a) Defendants, their spouses, and anyone (other than a  tenant or employee) sharing the household of any Defendant, (b) Fumitake Nishi, and (c) any Persons who submit a valid and timely request for exclusion pursuant to the Notice.
		

		
			8. "Class Counsel" or "Co-Lead Counsel" means the law firms of
		

		
			﻿
		

		
			Kessler Topaz Meltzer  & Check, LLP and Robbins Geller Rudma  & Dowd LLP.
		

		
			﻿
		

		
			9. "Class Member(s)" means a member of the Class.
		

		
			﻿
		

		
			10. "Class Period" means the period beginning August 22, 2012 through
		

		
			﻿
		

		
			﻿
		

		
			January 28, 2014, inclusive.
		

		
			﻿
		

		
			11. "Court" means the United States District Court for the District of
		

		
			﻿
		

		
			﻿
		

		
			Minnesota.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			6
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			12. "Defendants" means Tile Shop Holdings, Inc., Robert A. Rucker, The Tile Shop, Inc., Timothy C. Clayton, Peter J. Jacullo III, JWTS, Inc., Peter H. Kamin, Todd Krasnow, Adam L. Suttin, William E. Watts, Robert W. Baird & Co. Incorporated, Citigroup Global Markets Inc., CJS Securities, Inc., Houlihan Lokey Capital, Inc., Piper Jaffray & Co., Sidoti & Company, LLC, Telsey Advisory Group LLC, and Wedbush Securities, Inc.
		

		
			13. "Defendants' Counsel" means Faegre Baker Daniels LLP, Winthrop
		

		
			﻿
		

		
			& Weinstine, P.A., Briggs and Morgan, P.A. and Milbank, Tweed, Hadley & McCloy
		

		
			﻿
		

		
			LLP.
		

		
			﻿
		

		
			14. "Defendants' Released Parties" means each of the Defendants, and all and each of their respective past and present parent, subsidiary, and affiliated corporations and entities, the predecessors and successors in interest of any of them, and all of their respective past and present officers, directors, employees, members, agents, partners, representatives,  spouses, heirs, executors, administrators, and insurers (including the Insurers).
		

		
			15. "Effective Date" means the first date by which all events and conditions specified in ¶   IV(H)(l) of this Stipulation have been met and have occurred or have been waived.
		

		
			16. "Escrow Account" means the account wherein the Settlement
		

		
			﻿
		

		
			Amount shall be deposited and held in escrow under the control of the Escrow Agents.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			7
		

		
			﻿
		

		
			us 109306594 04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			17. "Escrow Agents" means the law firms of Kessler Topaz Meltzer & Check, LLP and Robbins Geller Rudman & Dowd LLP, or their successors, acting on behalf of the Parties in accordance with the terms of this Stipulation.
		

		
			18. "Final" means the date upon which any judgment or order, including the Final Judgment Order, in the Action becomes no longer subject to further appeal or review, including, without limitation: (a) if no appeal is filed, the date of expiration of the time provided for the filing or noticing of any appeal under the Federal Rules of
		

		
			Appellate Procedure; or (b) if an appeal is filed in the Action, (i) the date of final dismissal of all such appeals, or the final dismissal of any proceeding on certiorari or otherwise, or (ii) the date upon which the judgment in the Action is finally affirmed on appeal, the expiration of the time to file a petition for a writ of certiorari or other form of review, or the denial of a writ of certiorari or other form of review, and, if certiorari or other form of review is granted, the date of final affirmance following review pursuant to that grant.  However, any appeal proceeding seeking subsequent judicial review pertaining solely to an order issued with respect to: (a) the Fee and Expense Petition (as defined in ¶  IV(G)(l), or (b) the Plan of Distribution of the Net Settlement Fund (as submitted or subsequently modified), shall not in any way delay or preclude a judgment from becoming Final.
		

		
			19. "Final Judgment Order" means the Order for Final Judgment approving the settlement that is in substance materially the same as Exhibit B to this
		

		
			Stipulation.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			8  us 109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			20. "Insurers" means the insurers for Defendants, including but not limited to National Union Fire Insurance Company of Pittsburgh, Pa., Allied World Assurance Company, XL Specialty Insurance Company, ACE American Insurance Company, and their successors.
		

		
			21. "Lead Plaintiffs" means Beaver County Employees' Retirement
		

		
			﻿
		

		
			Fund, Erie County Employees' Retirement System, and Luc DeWulf.
		

		
			﻿
		

		
			22. "Net Settlement Fund" means the Settlement Fund less: (a) any
		

		
			﻿
		

		
			Administrative Expenses; and (b) amounts awarded on the Fee and Expense Petition.
		

		
			﻿
		

		
			﻿
		

		
			23. "Notice" means the Notice of Class Action Determination, Proposed Settlement, and Hearing on Settlement, substantially in the form attached hereto as Exhibit A-1, which is to be mailed to Class Members.
		

		
			24. "Parties" means, collectively, Lead Plaintiffs and Defendants.
		

		
			﻿
		

		
			25. "Person" means any individual, corporation, partnership,
		

		
			﻿
		

		
			association, joint stock company, trust, unincorporated organization, government and any political subdivision thereof, or any other type of entity.
		

		
			26. "Plaintiffs' Counsel" means Class Counsel, Court-appointed Liaison
		

		
			﻿
		

		
			Counsel, Chestnut  & Cambronne PC, and additional counsel Johnson  & Weaver, LLP.
		

		
			﻿
		

		
			27. "Preliminary Approval Order" means the Order Preliminarily Approving Settlement and Providing for Notice and Settlement Hearing or an order that is in substance materially the same as Exhibit A to this Stipulation.
		

		
			28. "Released Defendants' Claims" means any and all claims, actions,
		

		
			﻿
		

		
			causes of action, rights or liabilities, whether arising out of state, federal, foreign, or
		

		
			﻿
		

		
			9
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			common law, including Unknown Claims, of any Defendant against Lead Plaintiffs or Plaintiffs'  Counsel that solely arise out of or relate in any way to the institution, prosecution, or settlement of the claims asserted in the Action.  Released Defendants' Claims do not include any claims relating to the enforcement of the settlement.
		

		
			29. "Released Plaintiffs'  Claims" means any and all claims, actions, causes of action, rights or liabilities, whether arising out of state, federal, foreign, or common law, including Unknown Claims, of any Lead Plaintiff or Class Member, which exist or may exist against any of the Defendants'  Released Parties, by reason of any matter, event, cause or thing whatsoever arising out of, relating to, or in any way connected with: (a) the purchase, acquisition, sale, or disposition of Tile Shop common stock during the Class Period; and (b) any facts, circumstances, transactions, events, occurrences, acts, omissions or failures to act that were or could have been alleged in the Action.  Released Plaintiffs' Claims do not include any claims relating to the enforcement of the settlement.
		

		
			30. "Settlement Amount" means $9,500,000 in cash.
		

		
			﻿
		

		
			31. "Settlement  Fund" means the sum of $9,500,000,  to be paid by Tile Shop and/or the Insurers on behalf of Defendants as specified in ¶  IV(E)(l) of this Stipulation, including any interest accrued thereon after payment.
		

		
			32. "Settlement  Hearing" means the hearing or hearings before the Court to determine whether the settlement is fair, reasonable and adequate, the Final Judgment Order should be entered, the Plan of Distribution is fair, reasonable and adequate, and the
		

		
			Fee and Expense Petition should be approved.
		

		
			﻿
		

		
			10
		

		
			﻿
		

		
			US.109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			33. "Summary Notice" means the Summary Notice of Class Action Determination, Proposed Settlement, and Hearing on Settlement, substantially in the form attached hereto as Exhibit A-2.
		

		
			34. "Taxes" means: (a) all federal, state and/or local taxes of any kind (including any interest and penalties thereon) on any income earned by the Settlement Fund; and (b) all taxes imposed on payments by the Settlement Fund, including withholding taxes.
		

		
			35. "Tile Shop" means Tile Shop Holdings, Inc., a Delaware corporation, and its past and present parent, subsidiary, and affiliated corporations and entities, and the predecessors and successors in interest of any of them.
		

		
			36. "Unknown  Claims," as used in the definitions in ¶¶  IV(A)(28) and IV(A)(29), respectively, and in the Final Judgment Order, means any Released Plaintiffs' Claims which Lead Plaintiffs or any other Class Member does not know or suspect to exist in his, her or its favor at the time of the grant of such release, and any Released Defendants'  Claims which any Defendant does not know or suspect to exist in his or its favor at the time of the grant of such release, which if known by him, her or it might have affected their decision(s) with respect to the settlement of the Action.  It is the intention of the Parties hereto that, upon the Effective Date, Lead Plaintiffs and Defendants shall expressly waive, and each of the Class Members shall be deemed to have waived, and by operation of the Final Judgment Order shall have, expressly waived and relinquished, to the fullest extent permitted by law, the provisions, rights and benefits of any statute or law, which is similar, comparable, or equivalent to California Civil Code §1542, which 
		

		
			11
		

		
			﻿
		

		
			US.109306594.04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			provides:  A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.  Lead Plaintiffs and Defendants acknowledge, and each of the Class Members shall be deemed by operation of the Final Judgment Order to have acknowledged, that he, she or it is aware that they may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matters of the Released Plaintiffs'  Claims and Released Defendants'  Claims, respectively, but that it is his, her, or its intention upon the Effective Date, to have, fully, finally, and forever settled and released any and all claims within the scope of the Released Plaintiffs'  Claims and Released Defendants'  Claims, respectively, whether known or unknown, suspected or unsuspected, contingent or noncontingent, whether or not concealed or hidden, which
		

		
			now exist, may hereafter exist or may heretofore have existed, without regard to the subsequent discovery or existence of such different or additional facts.  All of the foregoing is the definition of "Unknown Claims."
		

		
			B.    The Court's Order Preliminarily Approving The Settlement And Providing For Notice And Settlement Hearing
		

		
			﻿
		

		
			As soon as practicable after the execution of this Stipulation, Class Counsel shall move the Court for an order that is in substance materially the same as the proposed Order attached hereto as Exhibit A ("Preliminary Approval Order"), which shall
		

		
			specifically include provisions which:
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			12 us 109306594 04
		

		
			 
		

		

		

		 

 

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			1. Preliminarily approve the settlement as embodied in this Stipulation as being fair, reasonable, and adequate to the Class;
		

		
			2.        Provide that Class Counsel are authorized to enter into the Stipulation on behalf of the Class, and to bind Class Members to the duties and obligations contained herein, subject to final approval by the Court;
		

		
			3. Appoint the firm of Gilardi  & Co. LLC to administer the notice procedure and the processing of claims ("Claims Administrator"), under the supervision of Class Counsel;
		

		
			4. Approve a Notice of Class Action Determination, Proposed Settlement, and Hearing on Settlement ("Notice") that is in substance materially the same as Exhibit A-1 attached hereto, and a Claim Form that is in substance materially the same as Exhibit A-3 attached hereto, for transmission to Class Members in order to provide notice of the hearing for approval of the settlement;
		

		
			5. Direct that the Claims Administrator mail such Notice to those Class Members who can be identified through reasonable effort, such mailing to be accomplished by first-class United States mail, postage prepaid, within fourteen (14) calendar days of entry of the Preliminary Approval Order;
		

		
			6. Order that nominees who purchased or otherwise acquired Tile Shop common stock for the beneficial ownership of Class Members during the Class Period be required, within ten (10) days of their receipt of the Notice, to either (a) forward the Notice and Claim Form to all such beneficial owners, or (b) provide the Claims
		

		
			Administrator with the names and addresses of such beneficial owners, in which event
		

		
			﻿
		

		
			13
		

		
			﻿
		

		
			US.!09306594 04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			the Claims Administrator shall promptly mail the Notice and Claim Form to such beneficial owners;
		

		
			7. Approve a Summary Notice that is in substance materially the same as Exhibit A-2 attached hereto, to be published in order to provide notice of the hearing for approval of the settlement, and direct that the Claims Administrator cause such Summary Notice to be published once in The Wall Street Journal and once over a  national newswire service, all no later than fourteen (14) calendar days following the mailing of the Notice;
		

		
			8. Find that mailing and distribution of the Notice and Claim Form, including forwarding by nominees, and publication of the Summary Notice pursuant to ¶  V(B)(4),(5),(6),  and (7) above constitute the best notice practicable under the circumstances, constitute due and sufficient notice of the matters set forth in the notices
		

		
			to all Persons entitled to receive notice, and fully satisfy the requirements of due process,
		

		
			﻿
		

		
			15 U.S.C. §78u-4(a)(7), Fed. R. Civ. P. 23, and all other applicable law and rules;
		

		
			﻿
		

		
			9. Require any Class Member who desires to request exclusion from the Class to so notify the Claims Administrator in the manner set forth in the Notice, and to provide the information required therein;
		

		
			10. Schedule a hearing to be held by the Court ("Settlement Hearing")  on a date at least 100 days after entry of the Preliminary Approval Order in order to determine: (a) whether the settlement should be approved as fair, reasonable, and adequate to the Class; (b) whether a final judgment should be entered that is in substance
		

		
			materially the same as Exhibit B attached hereto ("Final Judgment Order"); (c) whether
		

		
			﻿
		

		
			14
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Lead Plaintiffs'  proposed Plan of Distribution of the settlement proceeds that is described in the Notice ("Plan of Distribution") should be approved as fair, reasonable, and adequate to the Class; and (d) whether to approve the application of Class Counsel for an award of attorneys' fees and expenses, and for awards to the Lead Plaintiffs ("Fee and Expense Petition");
		

		
			11. Provide that any objections to the settlement, the Plan of Distribution, or the Fee and Expense Petition shall be heard, and any papers submitted in support of said objections shall be received and considered by the Court, at the Settlement Hearing (unless, in its discretion, the Court shall direct otherwise), only if, on or before a date to be specified in the Notice, Persons making objections give notice of their intention to appear and file with the Court and submit copies of such papers as they propose to submit to Class Counsel and counsel for Defendants, in the manner described in the Notice;
		

		
			12.      Provide that, in order to share in the Net Settlement Fund, a Class Member must execute and submit a Claim Form in the manner provided therein within such time as is allowed by the Court;
		

		
			13. Provide that, upon entry of the Final Judgment Order, all Class
		

		
			﻿
		

		
			Members, whether or not they submit a Claim Form within the time provided for, shall be permanently enjoined and barred from asserting any Released Plaintiffs'  Claims (except through the proof of claim procedures) against any of the Defendants'  Released Parties, and that all Class Members conclusively shall be deemed to have released any and all
		

		
			such Released Plaintiffs'  Claims, except for proceedings to enforce this Stipulation;
		

		
			﻿
		

		
			15
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			14. Provide that, upon the Effective Date, only Persons who are
		

		
			﻿
		

		
			﻿
		

		
			Authorized Claimants shall have rights in the distribution of the Net Settlement Fund;
		

		
			﻿
		

		
			﻿
		

		
			15. Provide that a Claim Form filed by mail shall be deemed to have been submitted when legibly postmarked by the U.S. Postal Service, if mailed by first­ class mail, registered mail, or certified mail, postage prepaid, addressed in accordance with the instructions given in the Claim Form, and that all other Claim Forms shall be deemed to have been submitted at the time they are actually received by the Claims Administrator; and
		

		
			16. Provide that the Settlement Hearing may, from time to time and without further notice to Class Members, be continued or adjourned by order of the Court.
		

		
			C.Releases
		

		
			﻿
		

		
			1. Upon the entry of the Order for Final Judgment, Lead Plaintiffs shall, and each of the Class Members shall be deemed to have, and by operation of such order shall have, fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged all Released Plaintiffs' Claims against Defendants' Released Parties, regardless of whether such Class Member executes and delivers the Claim Form.  Claims relating to the enforcement of the settlement shall not be released.
		

		
			2. Upon the entry of the Order for Final Judgment, Lead Plaintiffs and each of the Class Members are forever barred and enjoined from commencing, instituting, prosecuting, or continuing to prosecute any action or proceeding in any court of law or equity, arbitration tribunal, administrative forum, or other forum of any kind,
		

		
			16
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			asserting any of the Released Plaintiffs'  Claims against any of the Defendants'  Released
		

		
			﻿
		

		
			Parties.
		

		
			﻿
		

		
			﻿
		

		
			3. Upon the entry of the Order for Final Judgment, each of Defendants' Released Parties shall be deemed to have, and by operation of such order shall have,
		

		
			fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged Lead Plaintiffs, all Class Members, and Plaintiffs'  Counsel from all Released Defendants'  Claims, and shall be forever enjoined from prosecuting such claims.  Claims relating to the enforcement of the settlement shall not be released.
		

		
			4. Nothing in this Stipulation or the releases described in this ¶ IV(C) is intended to, or should be construed as, limiting or restricting the rights or claims any of the Defendants have against the Insurers, if any, under any policy of insurance or otherwise.
		

		
			D. Judgment To Be Entered By The Court Approving The Settlement
		

		
			﻿
		

		
			Upon approval by the Court of the settlement set forth in this Stipulation, a  final judgment shall be entered by the Court, pursuant to an Order for Final Judgment ("Final Judgment Order") that is in substance materially the same as Exhibit B attached hereto, which shall specifically include provisions which:
		

		
			1. Approve the settlement set forth in this Stipulation as fair, reasonable, and adequate to the Class, and direct consummation of the settlement in accordance with the terms and provisions of this Stipulation;
		

		
			2. Fully and finally dismiss the Action with prejudice, and without costs (except as may be provided herein) to any Party as against any other;
		

		
			17
		

		
			﻿
		

		
			US.l 09306594 04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			3. Adjudge that, upon entry of the Final Judgment Order, Lead Plaintiffs and all Class Members shall conclusively be deemed to have released all Released Plaintiffs' Claims against all Defendants' Released Parties;
		

		
			4. Bar and permanently enjoin Lead Plaintiffs and all Class Members, upon entry of the Final Judgment Order, from commencing, instituting, asserting, prosecuting, or continuing to prosecute any action or proceeding in any court of law or equity, arbitration tribunal, administrative forum, or other forum of any kind, asserting any of the Released Plaintiffs' Claims against any or all of the Defendants' Released Parties;
		

		
			5.        Adjudge that, upon entry of the Final Judgment Order, Defendants shall conclusively be deemed to have released all Defendants' Released Claims against Lead Plaintiffs, all Class Members, and Plaintiffs' Counsel;
		

		
			6. Bar and permanently enjoin Defendants, upon entry of the Final Judgment Order, from commencing, instituting, asserting, prosecuting, or continuing to prosecute any action or proceeding in any court of law or equity, arbitration tribunal, administrative forum, or other forum of any kind, asserting any of the Released Defendants'  Claims against Lead Plaintiffs, all Class Members or Plaintiffs'  Counsel;
		

		
			7. Determine, pursuant to 15 U.S.C. §78u-4(c)(l), that all counsel appearing in this Action have complied with the requirements of Rule 11(b) of the Federal Rules of Civil Procedure;
		

		
			8. Determine that Defendants have complied with the requirements of
		

		
			﻿
		

		
			﻿
		

		
			28 U.S.C. §1715(b);
		

		
			﻿
		

		
			18
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			9. Reserve jurisdiction over: (a) implementation of this settlement and any distribution of the Settlement Fund; (b) disposition of the Settlement Fund; (c)  hearing and determining applications for attorneys'  fees, interest, and expenses in the Action; (d) the Action, until the Effective Date, and until each and every act agreed to be performed by the Parties shall have been performed pursuant to this Stipulation; and (e)  all Parties, for the purpose of enforcing and administering this Stipulation.
		

		
			E. The Settlement Fund
		

		
			﻿
		

		
			1. Within ten (10) business days after the Court enters the Preliminary Approval Order, Tile Shop shall deposit or cause the Insurers to deposit into the Escrow Account established at The Huntington National Bank the sum of $9,500,000.  This amount, together with any interest accrued thereon, shall constitute the Settlement Fund. The payment described in this ¶ IV(E) is the only payment to be made by or on behalf of Defendants in connection with this settlement.
		

		
			2. The Settlement Fund shall be deemed to be in the custody of the Court, and shall remain subject to the jurisdiction of the Court until such time as the entirety of the Settlement Fund is distributed as provided in ¶ IV(F)(4) of this Stipulation, or returned to Defendants and/or their Insurers as provide in ¶ IV(E)(6) of this Stipulation.
		

		
			3. The Escrow Agents shall cause the Settlement Fund to be invested in instruments or accounts backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof, including a United States Treasury Fund or a bank account that is either (a) fully insured
		

		
			19
		

		
			﻿
		

		
			US.109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			by the Federal Deposit Insurance Corporation ("FDIC"), or (b) secured by instruments backed by the full faith and credit of the United States Government.  The Escrow Agents shall reinvest the proceeds of these instruments as they mature in similar instruments or their then-current market rates.  All risks related to the investment of the Settlement Fund in accordance with the guidelines set forth in this ¶  IV(E)(3) shall be borne by the Settlement Fund.
		

		
			4. Before the Effective Date, no disbursements shall be made out of the
		

		
			﻿
		

		
			Settlement Fund except: (a) upon order of the Court; (b) as provided in this Stipulation;
		

		
			﻿
		

		
			or (c) with the written agreement of Class Counsel and Defendants'  Counsel.
		

		
			﻿
		

		
			5. Prior to the Effective Date, the Escrow Agents may pay from the Settlement Fund Administrative Expenses up to the maximum total amount of $150,000. If, prior to the Effective Date, Administrative Expenses exceed $150,000, such additional amounts shall be paid only after approval by Defendants' Counsel, which shall not be unreasonably withheld.  After the Effective Date the Escrow Agents may pay from the Settlement Fund any additional, unpaid Administrative Expenses without further
		

		
			approval from Defendants or order of the Court.  Defendants' Released Parties are not responsible for, and shall not be liable for, any Administrative Expenses.
		

		
			6. If the Effective Date does not occur, or if this Stipulation is voided, terminated or cancelled for any reason, Lead Plaintiffs and Class Counsel shall have no obligation to repay any of the Administrative Expenses that have been disbursed or incurred in accordance with ¶ IV(E)(5).  Any amounts remaining in the Settlement Fund
		

		
			after payment of all Administrative Expenses disbursed or incurred in accordance with 
		

		
			﻿
		

		
			20
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			 ¶  IV(E)(5), including all interest earned on the Settlement Fund net of any tax liability, shall be returned to Defendants and/or their Insurers, and no other Person shall have any further claim whatsoever to such amounts.
		

		
			7. This is not a claims-made settlement.  As of the Effective Date, Defendants, the Insurers, and/or any other Person(s) funding the Settlement on Defendants' behalf, shall not have any right to the return of the Settlement Fund or any portion thereof for any reason.  As of the Effective Date, all rights of Defendants and the Insurers in or to the Settlement Fund shall be extinguished.
		

		
			8. The Settlement Fund shall be applied, subject to the approval of the Court, as follows:
		

		
			﻿
		

		
			(a) To pay to Class Counsel such attorneys' fees and litigation expenses as the Court may award on the Fee and Expense Petition;
		

		
			(b) To pay such amounts to Lead Plaintiffs as the Court may award on the Fee and Expense Petition;
		

		
			(c) To pay Administrative Expenses in accordance with  ¶ IV(E)(5); and
		

		
			﻿
		

		
			(d) To pay, after the Effective Date, the claims of all Authorized Claimants as allowed by the Plan of Distribution approved by the Court.
		

		
			9. The Settlement Fund is intended to be a Qualified Settlement Fund
		

		
			within the meaning of Treasury Regulation §1.468B-l. For the purposes of§1.468B, and the regulations promulgated thereunder, the "administrator" shall be the Escrow Agents. Defendants, Defendants' Counsel, and the Insurers shall have no liability or
		

		
			﻿
		

		
			21
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			responsibility for the payment of any Administrative Expenses.  The Escrow Agents shall be responsible for filing tax returns for the Settlement Fund and paying from the Settlement Fund any Taxes owed with respect to the Settlement Fund.  The Escrow Agents shall indemnify and hold harmless Defendants, Defendants' Counsel, and the Insurers for any liability for Administrative Expenses.  To the extent necessary, Defendants shall provide timely to the Escrow Agents the statement described in
		

		
			Treasury Regulations §1.468B-3(e). All costs incurred in connection with the taxation of the Settlement Fund, including Taxes, are considered "Administrative Expenses" and
		

		
			shall be paid out of the Settlement Fund by the Escrow Agents.
		

		
			﻿
		

		
			10. The Escrow Agents are authorized to execute such transactions as are provided for in this Stipulation.  The Escrow Agents shall not be responsible for the payment of any amounts due except to the extent of maintaining account of and appropriately paying amounts as required by this Stipulation, but only to the extent such amounts are delivered into the Escrow Account.  The Escrow Agents shall not be responsible for the performance of any obligations made herein by any Party to this Stipulation.
		

		
			F. Administration And Calculation Of Claims, Final Awards, And Supervision And Distribution Of The Settlement Fund
		

		
			﻿
		

		
			1. The Claims Administrator, subject to supervision and direction of
		

		
			﻿
		

		
			Class Counsel and the Court, shall provide notice of the Action and settlement to the
		

		
			﻿
		

		
			Class as set forth in the Preliminary Approval Order, shall administer and calculate the
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			22 us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Claim Forms submitted by Class Members, and shall oversee distribution of the Net
		

		
			﻿
		

		
			Settlement Fund to Authorized Claimants.
		

		
			﻿
		

		
			﻿
		

		
			2. Tile Shop shall make good faith efforts to provide within ten (10) business days following the execution of this Stipulation, and without any charge to Lead Plaintiffs or the Class, the transfer records/shareholder lists of Tile Shop for the relevant time period.
		

		
			3. Concurrently with submission of this Stipulation to the Court, Class Counsel are submitting a proposed Plan of Distribution of the Net Settlement Fund, which is set forth in the Notice.  At the Settlement Hearing, Class Counsel will ask the Court to approve the Plan of Distribution.  It is agreed by the undersigned Parties that Court approval of the proposed Plan of Distribution is not a condition of this Stipulation,
		

		
			and the proposed Plan of Distribution is to be considered by the Court separately from the Court's  consideration of the fairness, reasonableness and adequacy of the settlement set forth in this Stipulation.  Any order or proceedings relating to the proposed Plan of Distribution shall not operate to terminate or cancel this Stipulation or to affect its
		

		
			finality.  Lead Plaintiffs, Class Members, and Defendants shall be bound by the terms of this Stipulation, irrespective of whether the Court disapproves or modifies the Plan of Distribution.
		

		
			4. Upon the Effective Date and thereafter, and in accordance with the terms of the Stipulation, the Plan of Distribution, or such further approval and further order(s) of the Court as may be necessary or as circumstances may require, the Net
		

		
			﻿
		

		
			﻿
		

		
			23
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Settlement Fund shall be distributed to Authorized Claimants, subject to and in accordance with the following provisions.
		

		
			a.Each Person claiming to be an Authorized Claimant shall be required to submit to the Claims Administrator a completed Claim Form, substantially in the form of Exhibit A-3 attached hereto, postmarked or submitted electronically by a date set by the Court that is no later than ninety (90) calendar days after the mailing of the Notice (the "Bar Date"), signed under penalty of perjury and supported by such documents as are specified in the Claim Form and as are reasonably available to such Person.
		

		
			b.        Except as otherwise ordered by the Court, all Class Members who fail to submit a Claim Form by the Bar Date, or such other period as may be ordered by the Court, or who submit a Claim Form that is rejected as deficient and not cured,
		

		
			shall be forever barred from receiving any payments pursuant to the Stipulation and the settlement set forth herein, but will in all other respects be subject to and bound by the provisions of the Stipulation, the releases contained herein, and the Final Judgment Order.  Upon the entry of the Final Judgment Order, Lead Plaintiffs, all Class Members, and anyone claiming through or on behalf of any of them, will be forever barred and
		

		
			enjoined from commencing, instituting, asserting, prosecuting, or continuing to prosecute any action or proceeding in any court of law or equity, arbitration tribunal, administrative forum, or other forum of any kind, that tries to assert the Released Plaintiffs'  Claims against any of the Defendants'  Released Parties.  Notwithstanding the foregoing, Class
		

		
			Counsel shall have the discretion, but not the obligation, to accept for processing late-
		

		
			﻿
		

		
			24
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			submitted claims so long as the distribution (or redistribution) of the Net Settlement Fund to Authorized Claimants is not materially delayed as a result.  No Person shall have any claim against Class Counsel, Lead Plaintiffs, the Claims Administrator, or Defendants' Released Parties by reason of the decision to exercise such discretion whether to accept late claims.
		

		
			c. The Claims Administrator shall calculate the claims of Authorized Claimants in accordance with the Plan of Distribution.  Following the Effective Date, the Claims Administrator shall send to each Authorized Claimant his, her, or its share of the Net Settlement Fund in accordance with the Plan of Distribution.  No distributions will be made to Authorized Claimants whose distribution would be less than
		

		
			$10.00.
		

		
			﻿
		

		
			d. If there is any balance remaining in the Net Settlement Fund after a reasonable period of time after the initial date of distribution of the Net Settlement Fund, then after the Claims Administrator has made reasonable efforts to have
		

		
			Authorized Claimants cash their distributions, the Claims Administrator shall, if feasible, distribute such balance among Authorized Claimants in an equitable and economical fashion.  These redistributions shall be repeated until the balance remaining in the Net Settlement Fund is a de minimis amount that can no longer be distributed to Authorized Claimants in an equitable and economical fashion.  Such remaining balance shall then be donated to the following non-profit organization: Mid-Minnesota Legal Aid.
		

		
			e. Defendants and Defendants' Released Parties shall have no
		

		
			﻿
		

		
			responsibility for, interest in, or liability whatsoever with respect to the distribution of the
		

		
			﻿
		

		
			25
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Net Settlement Fund, the Plan of Distribution, the determination, administration, or calculation of claims, the payment or withholding of Taxes, the Escrow Account, the Escrow Agents, Administrative Expenses, or any losses incurred in connection with the foregoing.  No Person, including Lead Plaintiffs, Class Members, and Plaintiffs' Counsel, shall have any claim of any kind against Defendants or Defendants' Released Parties with respect to the matters set forth in this paragraph.
		

		
			f. No Person shall have any claim against Lead Plaintiffs, Plaintiffs' Counsel, or the Claims Administrator based on distributions made
		

		
			substantially in accordance with the Stipulation and the Plan of Distribution, or otherwise as further ordered by the Court.
		

		
			G. The Fee And Expense Petition
		

		
			﻿
		

		
			1. No later than fourteen (14) calendar days prior to the deadline for submitting objections/requesting  exclusion from the Class set forth in the Notice, Class Counsel will file the Fee and Expense Petition for (a) an award of attorneys' fees, (b) the reasonable expenses incurred by Plaintiffs'  Counsel in connection with prosecuting the Action, and (c) any interest on such fees and expenses at the same rate and for the same time periods as earned by the Settlement Fund (until paid).  The Fee and Expense Petition may also include a request for reimbursement pursuant to 15 U.S.C. §78u-4(a)(4) for
		

		
			Lead Plaintiffs' expenses and time related to their representation of the Class.  Any amounts awarded on the Fee and Expense Petition shall be paid only from the Settlement Fund and shall not otherwise be paid by Defendants or the Insurers.  Class Counsel may allocate the amounts awarded on the Fee and Expense Petition among Plaintiffs' Counsel
		

		
			26
		

		
			﻿
		

		
			US.l09306594 04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			in a manner in which they in good faith believe reflects the contributions of such counsel to the institution, prosecution, and resolution of the Action.
		

		
			2. It is agreed that the allowance or disallowance by the Court of the Fee and Expense Petition is not a term or condition of the settlement set forth in this Stipulation, and any order or proceeding relating thereto, or any appeal from any such order, shall not operate to terminate or cancel this Stipulation.
		

		
			3. The amount awarded by the Court on the Fee and Expense Petition shall be paid to Class Counsel from the Settlement Fund within five (5) business days upon entry of an order awarding such attorneys' fees and expenses, notwithstanding timely objections to, potential for appeal from, or collateral attack on, the settlement or the award of fees and expenses.  In the event that the Final Judgment Order or the order awarding such fees and expenses is reversed or modified by final non-appealable order, or if the settlement is cancelled or terminated by a final non-appealable order for any reason, then Class Counsel shall, in an amount consistent with such reversal or modification,  refund such fees or expenses to the Settlement Fund, plus interest earned thereon at the same rate as earned on the Settlement Fund, within ten (10) business days from receiving notice from Defendants'  Counsel or from a court of competent jurisdiction.
		

		
			H. Conditions Of Settlement; Effect Of Disapproval, Cancellation And
		

		
			Termination
		

		
			﻿
		

		
			1. The Effective Date of this Stipulation shall be conditioned on the occurrence of all of the following events:
		

		
			﻿
		

		
			27
		

		
			﻿
		

		
			US. 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			(a) The Settlement Amount has been deposited into the Escrow Account in conformity with ¶ IV(E)(1) hereof;
		

		
			(b) The Court has entered an order preliminarily approving the settlement and directing notice of the Action and settlement to the Class, in substance materially the same as ¶ IV(B)(l) and Exhibit A;
		

		
			(c) Defendants have not exercised their option to terminate the settlement pursuant to the provisions of this Stipulation;
		

		
			(d) Lead Plaintiffs have not exercised their option to terminate the settlement pursuant to the provisions of this Stipulation;
		

		
			(e) The Court has entered the Final Judgment Order as provided in
		

		
			﻿
		

		
			¶ IV(D) and Exhibit B hereto; and
		

		
			﻿
		

		
			(f) The Final Judgment Order has become Final.
		

		
			﻿
		

		
			2. If all of the conditions specified above ¶ IV(H)(l) are not met, then this Stipulation shall be canceled and terminated subject ¶ IV(H)(5) hereof unless Lead Plaintiffs and Defendants mutually agree in writing to proceed with this Stipulation.
		

		
			3. Defendants, collectively, shall have the right to terminate and cancel this Stipulation in the event that members of the Class who request exclusion from the Class collectively have purchased or acquired more than a certain number of shares of Tile Shop common stock during the Class Period (the "Opt-Out Threshold"), as set forth in a separate agreement (the "Supplemental Agreement") executed between Lead Plaintiffs and Defendants, which is incorporated by reference into this Stipulation.  The
		

		
			Supplemental Agreement will not be filed with the Court unless and until a dispute
		

		
			﻿
		

		
			28
		

		
			﻿
		

		
			US.\09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			among the Parties concerning its interpretation or application arises.  If required by the Court, the Supplemental Agreement and/or any of its terms may be disclosed in camera to the Court for purposes of approval of the settlement, but such disclosure shall be carried out to the fullest extent possible in accordance with the practices of the Court so as to preserve the confidentiality of the Supplemental Agreement.  Copies of all requests for exclusion shall be simultaneously sent to Class Counsel and Defendants' Counsel within a reasonable time of receipt by the Claims Administrator.
		

		
			4. Lead Plaintiffs shall have the right, but not the obligation, to terminate the settlement ten (10) calendar days after the failure of Defendants to deposit or cause to be deposited the Settlement Amount into the Escrow Account in accordance with ¶  IV(E)(l) hereof.
		

		
			5. In the event that this Stipulation is voided, terminated or cancelled,
		

		
			﻿
		

		
			or fails to become effective for any reason whatsoever, then within seven (7) business days after written notice is sent by any Party to the Escrow Agents and all other Parties, the Escrow Agents shall cause the Settlement Amount and all interest earned thereon to be refunded to Tile Shop and Insurer(s) who paid into the Escrow Fund, less any Administrative Expenses disbursed, billed, or incurred in accordance with the terms of this Stipulation, in the same proportions that they contributed to the Settlement Amount. In such event, the Parties shall be deemed to have reverted to their respective statuses as of the date and time immediately prior to the execution of this Stipulation, and they shall proceed in all respects as if this Stipulation, its exhibits, and any related agreements or
		

		
			﻿
		

		
			﻿
		

		
			29
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			orders, had never been executed.   In such event, the Parties jointly will seek vacation of any order entered or actions taken in connection with this Stipulation.
		

		
			I. No Admissions
		

		
			﻿
		

		
			1. Except as otherwise expressly provided herein, this Stipulation, whether or not consummated, and any proceedings taken pursuant to it:
		

		
			a. shall not be offered or received against Defendants for any purpose, including without limitation as evidence of, or construed as or deemed to be evidence of, any presumption, concession or admission by any of Defendants with respect to the truth of any fact alleged by Lead Plaintiffs or the validity of any claim that had been or could have been asserted against Defendants in the Action or in any proceeding, or of any liability, negligence, fault or wrongdoing of Defendants;
		

		
			b. shall not be offered or received against Defendants for any purpose, including without limitation as evidence of a presumption, concession or admission of any fault, misrepresentation or omission with respect to any statement or written document approved or made by any Defendant;
		

		
			c. shall not be offered or received against Defendants or against Lead Plaintiffs or any other Class Members for any purpose, including without limitation as evidence of a presumption, concession or admission with respect to any liability, negligence, fault or wrongdoing, or in any way referred to for any other reason as against any of the Parties to this Stipulation, in any other civil, criminal or administrative action or proceeding, other than such proceedings as may be necessary to effectuate the provisions of this Stipulation; provided, however, that if this Stipulation is approved by
		

		
			30
		

		
			﻿
		

		
			US.l09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			the Court, Defendants may refer to them to effectuate the liability protection granted them hereunder;
		

		
			d. shall not be construed against Defendants, Lead Plaintiffs or any other Class Members for any purpose, including without limitation as an admission or concession that the consideration to be given hereunder represents the amount that could be or would have been recovered after trial; and/or
		

		
			e. shall not be construed as or received in evidence as an admission, concession or presumption against Lead Plaintiffs or other Class Members or any of them as evidence of any infirmity in their claims or that any of their claims are without merit or that damages recoverable under the Consolidated Complaint would not have exceeded the Settlement Amount.
		

		
			J. Miscellaneous Provisions
		

		
			﻿
		

		
			1. All of the exhibits attached hereto are hereby incorporated by this reference as though fully set forth herein.
		

		
			2.If a case is commenced in respect to any Defendant under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver, or conservator is appointed under any similar law, and in the event of the entry of a final order of a court of
		

		
			competent jurisdiction determining the transfer of the Settlement Amount, or any portion thereof, by or on behalf of such Defendant to be a preference, voidable transfer, fraudulent transfer, or similar transaction, then, at Lead Plaintiffs'  option, and only as to such Defendant, the releases given and Final Judgment Order entered in favor of such
		

		
			Defendant pursuant to this Stipulation shall be null and void.
		

		
			﻿
		

		
			31
		

		
			﻿
		

		
			us 109306594 04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			3. This Stipulation may be amended or modified only by a written instrument signed by all of the Parties to this Stipulation or their successors-in-interest, except to the extent that any modification would be inconsistent with any order by the Court.
		

		
			4. The waiver by one Party of any breach of this Stipulation by any other Party shall not be deemed a waiver, by that Party or by any other Party to this Stipulation, of any other prior or subsequent breach of this Stipulation.
		

		
			5. This Stipulation and its exhibits and the Supplemental Agreement constitute the entire agreement among the Parties hereto, and no representations, warranties or inducements have been made to any Party concerning this Stipulation and its exhibits or the Supplemental Agreement other than the representations, warranties and covenants contained and memorialized in such documents.
		

		
			6. Class Counsel, on behalf of the Class, are authorized to take all appropriate action required or permitted to be taken by the Class pursuant to this Stipulation to effectuate its terms.  Class Counsel also are authorized to enter into any modifications or amendments to this Stipulation on behalf of the Class which such counsel deem appropriate.
		

		
			7. This Stipulation will be executed on behalf of the Parties hereto by their respective counsel of record.  All counsel executing this Stipulation represent and warrant that they are authorized and empowered to execute this Stipulation on behalf of
		

		
			their stated client(s), and that the signature of such counsel is intended to and does legally
		

		
			﻿
		

		
			bind stated client(s) of such counsel.
		

		
			﻿
		

		
			32
		

		
			﻿
		

		
			us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			8. This Stipulation may be executed in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument.  Counsel for the Parties hereto shall exchange among themselves signed counterparts.  Signatures may be originals, or facsimile or pdf. copies.
		

		
			9. This Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the Parties to this Stipulation.
		

		
			10. All terms of this Stipulation and the exhibits hereto shall be
		

		
			﻿
		

		
			﻿
		

		
			governed by and interpreted according to the laws of the State of Minnesota, except to the extent that federal law applies.
		

		
			11. The Parties to this Stipulation and their counsel agree to use their
		

		
			﻿
		

		
			﻿
		

		
			best efforts, and to take all reasonable steps necessary, to obtain the entry of the Final
		

		
			﻿
		

		
			Judgment Order and to effectuate the settlement set forth in this Stipulation.
		

		
			﻿
		

		
			12. The Parties and their counsel agree that they will refrain from disparaging the Settlement or each other with respect to the Action in any press releases or statements to the media, or in any other communication.
		

		
			IN WITNESS WHEREOF, the Parties hereto have caused this Stipulation
		

		
			﻿
		

		
			﻿
		

		
			to be executed, by their duly authorized attorneys, as of the date stated above.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			33 us 109306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Dated:  January 13, 2017 
		

		
			﻿
		

		
			KESSLER TOPAZ MELTZER & CHECK, LLP
		

		
			
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Kimberly A. Justice Michelle M. Newcomer Nathan A. Hasuik
		

		
			280 King of Prussia Road
		

		
			Radnor, PA 19087
		

		
			Telephone: (610) 667-7706
		

		
			Facsimile:  (610) 667-7056 and
		

		
			Stacey M. Kaplan
		

		
			Paul A. Breucop
		

		
			One Sansome Street, Suite 1850
		

		
			San Francisco, CA 94104
		

		
			Telephone: 415-400-3000
		

		
			Facsimile: 415-400-3001
		

		
			﻿
		

		
			ROBBINS GELLER RUDMAN & DOWD LLP
		

		
			﻿
		

		
			
		

		
			Joseph Russello
		

		
			William J. Geddish
		

		
			58 South Service Road, Suite 200
		

		
			Melville, NY 11747
		

		
			Telephone: (631) 367-7100
		

		
			Facsimile:  (631) 367-1173 and
		

		
			Jeffrey D. Light
		

		
			655 West Broadway
		

		
			Suite 1900
		

		
			San Diego, CA 92101
		

		
			Telephone:  (619) 231-1058
		

		
			Facsimile:  (619) 231-7423
		

		
			﻿jlight@rgrdlaw.com
		

		
			﻿
		

		
			Counsel for Lead Plaintiffs  and the Class
		

		
			﻿
		

		
			34
		

		
			﻿
		

		
			US.I09306594.04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			FAEGRE BAKER DANIELS LLP
		

		
			
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			Wendy J. Wildung (#117055)
		

		
			Justin P. Krypel   (#389385)  Staci L. Perdue   (#395216)
		

		
			2200  Wells Fargo  Center
		

		
			90 South Seventh  Street
		

		
			Minneapolis, MN  55402-3901
		

		
			Telephone: (612) 766-7000
		

		
			Facsimile: (612)  766-1600
		

		
			﻿
		

		
			Counsel for Defendants Tile  Shop   Holdings, Inc.,  Robert  A.  Rucker, The Tile Shop, Inc. and Timothy C. Clayton
		

		
			
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			David P. Pearson
		

		
			Matthew C. Robinson
		

		
			225 South Sixth Street,  Suite 3500
		

		
			Minneapolis, MN  55402
		

		
			Telephone: (612) 604-6400
		

		
			Facsimile: (612)604-6912
		

		
			﻿
		

		
			Counsel  for Defendants Peter J. Jacullo III, JWTS, Inc., Peter H. Kamin, Todd Krasnow, Adam L. Suttin and William E. Watts
		

		
			﻿
		

		
			MILBANK, TWEED, HADLEY & MCCLOY LLP
		

		
			﻿
		

		
			
		

		
			Scott A. Edelman
		

		
			Jed M. Schwartz
		

		
			28 Liberty  Street
		

		
			New York, NY  10005
		

		
			Telephone: (212) 530-5000
		

		
			Facsimile: (212)  822-5149
		

		
			﻿
		

		
			Counsel  for Robert W. Baird & Co. Incorporated, Citigroup  Global Markets Inc.,
		

		
			﻿
		

		
			35
		

		
			﻿
		

		
			US.I09306594 04
		

		
			 
		

		

		

		 

 

		

			 

		

		﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			CJSSecurities, Inc., Houlihan Lokey Capital, 
		

		
			Inc., Piper Jaffray & Co., Sidoti & Company, LLC, Telsey Advisory Group LLC, and 
		

		
			Wedbush Securities, Inc.
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			﻿
		

		
			36
		

		
			﻿
		

		
			US.l09306594.04
		

		
			﻿
		

		
			﻿
		

		
			﻿Exhibit 10.121

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

PIONEER HEALTH
SERVICES OF ONEIDA LLC,

 

PIONEER HEALTH
SERVICES OF ONEIDA REAL ESTATE LLC,

 

AND

 

RENNOVA HEALTH,
INC.

 

 

 

 

 

 

October 26, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	 	 

     

    

 

TABLE OF CONTENTS

 

	ARTICLE I PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES	1
	1.1	Purchase and Sale of Assets	1
	1.2	Excluded Assets	2
	1.3	Assumption of Liabilities	3
	1.4	Excluded Liabilities	4
	1.5	Assigned Contracts and Cure Amounts	4
	1.6	Further Conveyances and Assumptions	5
	1.7	Bulk Sales Laws	5
	 	 	 
	ARTICLE II CONSIDERATION	5
	2.1	Purchase Price	5
	2.2	Deposit	6
	2.3	Payment of Consideration	6
	 	 	 
	ARTICLE III CLOSING AND TERMINATION	6
	3.1	Closing Date	6
	3.2	Deliveries by Sellers	6
	3.3	Deliveries by Purchaser	7
	3.4	Termination of Agreement	8
	3.4	Procedure For Termination	9
	3.6	Effect of Termination	9
	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS	10
	4.1	Organization and Good Standing	10
	4.2	Authorization of Agreement; No Conflict	10
	4.3	Intentionally Omitted	10
	4.4	Title to Purchased Assets; Condition and Adequacy	10
	4.5	Litigation	10
	4.6	Permits	11
	4.7	Environmental Matters	11
	4.8	Insurance Policies	11
	4.9	Real Property	11
	4.10	Intentionally Omitted	11
	4.11	Intentionally Omitted	11
	4.12	Intentionally Omitted	12
	4.13	Employees	12
	4.14	Intentionally Omitted	12
	4.15	Reimbursement	12
	4.16	Intentionally Omitted	12
	4.17	Intentionally Omitted	12
	4.18	Brokers or Finders	12
	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER	12
	5.1	Organization and Good Standing	12
	5.2	Authorization of Agreement	12

 

 

 

 

 

 

    	 	i	 

     

    

 

	5.3	Conflicts; Consents of Third Parties	13
	5.4	Litigation	13
	5.5	Financial Advisors	13
	5.6	Financial Ability to Close	13
	 	 	 
	ARTICLE VI BANKRUPTCY COURT MATTERS	13
	6.1	Bankruptcy Status	13
	6.2	Bankruptcy Court Filings	14
	6.3	Notice	14
	6.4	Competing Transaction	14
	6.5	Purchaser Termination Fee	15
	 	 	 
	ARTICLE VII COVENANTS	15
	7.1	Access to Information	15
	7.2	Conduct of the Business Pending the Closing	16
	7.3	Consents and Permits; Insurance	16
	7.4	Regulatory Approval	17
	7.5	Further Assurances	17
	7.6	Confidentiality	17
	7.7	Intentionally Omitted	17
	7.8	Publicity	17
	7.9	Intentionally Omitted	18
	7.10	Intentionally Omitted	18
	7.11	Cooperation	18
	7.12	Intentionally Omitted	18
	7.13	Intentionally Omitted	18
	7.14	Misdirected Payments, Etc	18
	7.15	Notice of Developments	18
	7.16	Release of Guarantor	18
	7.17	Non-Competition	18
	 	 	 
	ARTICLE VIII CONDITIONS TO CLOSING	19
	8.1	Conditions Precedent to Obligations of Purchaser	19
	8.2	Conditions Precedent to Obligations of Sellers	19
	8.3	Conditions Precedent to Obligations of Purchaser and Sellers	20
	8.4	Frustration of Closing Conditions	20
	 	 	 
	ARTICLE IX TAXES	20
	9.1	Transfer Taxes	20
	9.2	Prorations	20
	9.3	Purchase Price Allocation	21
	9.4	Cooperation on Tax Matters	21
	 	 	 
	ARTICLE X MISCELLANEOUS	21
	10.1	Expenses	21
	10.2	Other Definitional and Interpretive Matters	21
	10.3	Injunctive Relief	22
	10.4	Submission to Jurisdiction; Consent to Service of Process	22

 

 

 

 

 

    	 	ii	 

     

    

 

	10.5	Entire Agreement: Amendments and Waivers	23
	10.6	Governing Law	23
	10.7	Notice	23
	10.8	Severability	24
	10.9	Binding Effect; Assignment	24
	10.10	No Personal Liability	24
	10.11	Counterparts	24
	10.12	Acknowledgment by Purchaser	24

 

List of Disclosure Schedules, Annexes and Exhibits.

 

	Schedule 1.1(b)	Purchased Personal Property
	Schedule 1.1(d)	Assigned Contracts
	Schedule 1.1(f)	Permits
	Schedule 1.2(b)	Excluded Deposit Accounts
	Schedule 1.2(l)	Transferred Property
	Schedule 4.2(b)	Contravention
	Schedule 4.4	Purchased Assets (w/Liens)
	Schedule 4.5	Legal Proceedings
	Schedule 4.7	Environmental Matters
	Schedule 4.8	Insurance Policies
	Schedule 4.9	Real Estate and Real Property Leases
	Schedule 4.18	Brokers
	Schedule 5.3(a)	Purchaser’s Required Consents/Approvals
	Schedule 5.3(b)	Conflicts
	Schedule 5.4	Orders
	Schedule 11.1(a)	“Knowledge” Officers/Managers of Purchaser and Sellers
	Schedule 11.1(b)	Permitted Exceptions

 

 

	Annex 1	Definitions
	 	 
	Exhibit A	Legal Description for Real Estate
	Exhibit B	Form of Bill of Sale
	Exhibit C	Form of Assignment and Assumption Agreement
	Exhibit D	Form of Special Warranty Deed
	Exhibit E	Form of FIRPTA
	Exhibit F	Sale Order

 

 

 

 

 

 

    	 	iii	 

     

    

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET
PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of October 26, 2016, among PIONEER HEALTH
SERVICES OF ONEIDA LLC, a Mississippi limited liability company (“Hospital Seller”), PIONEER HEALTH SERVICES
OF ONEIDA REAL ESTATE LLC, a Mississippi limited liability company (“Real Estate Seller,” each individually
a “Seller” and, collectively with Hospital Seller, the “Sellers”), and RENNOVA HEALTH,
INC., a Delaware corporation (“Rennova” or “Purchaser”). Capitalized terms used herein
are defined in Annex 1 attached hereto.

 

WHEREAS,
Hospital Seller presently owns and previously operated a hospital located at 18797 Alberta Street, Oneida, Tennessee 37841, known
as Pioneer Community Hospital of Scott (the “Hospital”) and Real Estate Seller owns that certain real property
identified by tax parcel identification number 052H_F_014.00 and located at 18797 Alberta Street, Oneida, Tennessee 37841 and more
fully described on Exhibit A attached hereto (the “Real Estate”) (the Hospital and the services and programs
provided thereat and the Real Estate are collectively referred to as the “Business”); and

 

WHEREAS,
Sellers desire to sell, transfer and assign to Purchaser, and Purchaser desires to purchase, acquire and assume from Sellers pursuant
to this Agreement, the Sale Order, the Sale Motion and Sections 105, 363 and 365 of Title 11 of the United States Code, 11 U.S.C.
Section 101 et seq. (the “Bankruptcy Code”) all of the Purchased Assets and Assumed Liabilities, all as more
specifically provided herein.

 

NOW,
THEREFORE, for and in consideration of the promises, agreements, covenants, representations and warranties hereinafter contained
and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF ASSETS; ASSUMPTION
OF LIABILITIES

 

1.1              
Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing
and subject to entry of the Sale Order, Purchaser shall purchase, acquire and accept from Sellers, and Sellers shall sell, transfer,
assign, convey and deliver to Purchaser (the “Contemplated Transactions”) all of Sellers’ respective
right, title and interest in, to and under the Purchased Assets, free and clear of any and all Liens, other than Permitted Exceptions
(but excluding the Permitted Exceptions described in clause (vii) of the definition of Permitted Exceptions and as noted in Schedule
4.4). “Purchased Assets” means the following assets of the Sellers, wherever located and whether or not
carried or reflected on the books and records of Sellers, excluding the Excluded Assets:

 

(a)      
(i) all right, title and interest of Sellers in and to the Real Estate together with all improvements and fixtures thereto
and other appurtenances and rights in respect thereof and (ii) all right, title and interest of Sellers under any Real Property
Leases included among the Contracts listed in Schedule 1.1(d) (collectively, the “Purchased Real Property”);

 

(b)      
(i) the Furniture and Equipment and (ii) the tools, spare parts, supplies (including all of Sellers’ Inventory) and
all other tangible personal property owned by Sellers or used by Sellers in the conduct of the Business and located in the Ordinary
Course of Business at the Purchased Real Property or the Hospital as set forth on Schedule 1.1(b) (collectively, the “Purchased
Personal Property”);

 

(c)
[intentionally omitted];

 

 

 

 

 

    	 	 	 

     

    

 

(d)      
the Contracts listed on Schedule 1.1(d) hereto, which Contracts will be assumed by Sellers and assigned and sold
to Purchaser pursuant to Section 365 of the Bankruptcy Code, and which schedule may be supplemented and/or modified by the Purchaser
up to twenty-one (21) days prior to the hearing by the Bankruptcy Court to approve this Agreement, which is anticipated to occur
on November 18, 2016 (the “Assigned Contracts”);

 

(e)      
to the extent transferable, all Documents that are solely used in, held for use in or intended to be used in, or that arise
primarily out of, the Business, including Documents relating to the services provided by the Business, the marketing of the Business’
services (including advertising and promotional materials), personnel files for Employees of Sellers and files including credit
information and supplier lists, to the extent physically located at the Facilities, and copies of all Medical Records regardless
of where they are located, but excluding any Documents described in Section 1.2(f);

 

(f)         
except as set forth in Section 1.2(d), to the extent transferable, all Permits that remain valid and that are listed
in Schedule 1.1(f);

 

(g)      
to the extent transferable, all rights of each Seller under non-disclosure or confidentiality, non-compete, or non-solicitation
agreements with employees and agents of such Seller or with third parties to the extent relating to the Business or the Purchased
Assets (or any portion thereof);

 

(h)      
to the extent transferable, all rights of each Seller under or pursuant to all warranties, representations and guarantees
made by suppliers, manufacturers and contractors to the extent relating to services provided to such Seller after the Closing
or to the extent affecting any Purchased Assets, other than any warranties, representations and guarantees pertaining to any Excluded
Assets;

 

(i)        
all goodwill and other intangible assets (other than Intellectual Property Rights) owned by each Seller and associated
with the Business, including customer and supplier lists; and

 

(j)        
to the extent transferable, all telephone numbers and facsimile numbers, and domain names and email addresses.

 

1.2              
Excluded Assets. Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets
to Purchaser, and Sellers shall retain all right, title and interest to, in and under the Excluded Assets. “Excluded
Assets” shall mean any assets of the Sellers that are not Purchase Assets, including the following assets, properties,
interests and rights of the respective Sellers:

 

(a)      
the Excluded Contracts, including any Contract not listed in Schedule 1.1(d);

 

(b)      
all deposit accounts listed on Schedule 1.2(b) hereto, all cash, cash equivalents, bank deposits or similar cash
items of each Seller, all marketable securities owned by each Seller and all Documents related thereto;

 

(c)
all accounts receivable of Sellers;

 

(d)      
any and all Medicare and Medicaid provider numbers of Sellers or the Business and any corresponding provider agreements
with CMS or any state Medicaid agency;

 

(e)      
any other Contract to which a Seller is a party or under which it has rights that is not used primarily in the Business;

 

 

 

 

 

    	 	-2-	 

     

    

 

(f)       
any (i) other books and records that Sellers are required by Law to retain; provided, however, that Purchaser
shall have the right to make copies of any portions of such retained books and records that relate to the Business as conducted
before the Closing (except as prohibited by Law) or that relate to any of the Purchased Assets; (ii) Documents which any Seller
is not permitted to transfer pursuant to any contractual confidentiality obligation owed to any third party (other than any patient
confidentiality obligation referred to in the foregoing clause (i)); (iii) books and records and other Documents related to malpractice
prevention programs, credentialing, incident reporting or quality assurance to the extent confidential under applicable Law that
a Seller elects or is required to retain; and (iv) any Documents primarily related to or that are required to realize the benefits
of any Excluded Assets;

 

(g)      
any claim, right or interest of a Seller in or to any refund, rebate, abatement or other recovery for Taxes, together with
any interest due thereon or penalty rebate arising therefrom;

 

(h)      
all insurance policies or rights to proceeds with respect to Excluded Assets and in respect of tort liabilities and other
Excluded Liabilities;

 

(i)        
all of Sellers’ deposits or prepaid charges and expenses paid in connection with or relating to any Excluded Assets;

 

(j)
all rights in connection with and assets of any Employee Benefit Plans;

 

(k)      
all deposits remaining at the Closing Date (including customer deposits and security deposits for rent, electricity, telephone
or other utilities and deposits posted under any Assigned Contract) and prepaid charges and expenses of Sellers, other than any
deposits or prepaid charges and expenses paid in connection with or relating to any Excluded Assets or which have been or will
be netted by the holder thereof against any unpaid pre-petition or post-petition liability of Sellers;

 

(l)        
all supplies and equipment that were transferred from the Newton Hospital (the “Transferred Property”)
to the Business as set forth on Schedule 1.2(l);

 

(m)
the name “Pioneer Community Hospital of Scott”;

 

(n)
the Intellectual Property; and

 

(o)
all other rights of Sellers under this Agreement and the Contemplated Transactions.

 

1.3              
Assumption of Liabilities. Purchaser will not assume or otherwise be responsible for any Liabilities of Sellers,
except that from and after the Closing, Purchaser shall assume as and when due, the following Liabilities (collectively, the “Assumed
Liabilities”) and no others:

 

(a)      
Indebtedness of Sellers under the First Deed of Trust, the amount of which shall not exceed $450,000 as of the Closing,
and any fees or expenses charged by the lender for the assumption of the First Deed of Trust (the “Assumed Indebtedness”);

 

(b)
all Liens encumbering the Real Estate;

 

(c)      
all Liabilities, including continuing performance obligations, first accruing from and after the Closing with respect to
the Assigned Contracts (other than the Assumed Indebtedness);

 

(d)      
all Cure Amounts; and

 

 

 

 

    	 	-3-	 

     

    

 

(e)       all Liabilities of any kind
or nature arising out of or in connection with the ownership of the Purchased Assets by Purchaser after the Closing Date.

 

1.4              
Excluded Liabilities. Except for the Assumed Liabilities, Purchaser shall not assume or become liable for the payment
or performance of any Liability of any Seller, which shall remain Liabilities of the respective Seller (the “Excluded
Liabilities”), including the following:

 

(a)      
any Liability based upon any act or omission of a Seller, including trade payables;

 

(b)      
except as otherwise provided in Article IX, any Liability for Taxes of a Seller arising from the operation of the
Business or any Taxes in the nature of income tax imposed upon Sellers in connection with the sale of the Purchased Assets contemplated
hereby;

 

(c)
any Liability associated with any Excluded Assets;

 

(d)      
any Liability relating to any breach of contract, breach of warranty, tort, infringement or violation of Law by a Seller;

 

(e)      
any Liability arising out of events, acts or omissions occurring prior to the Closing Date from or relating to any overpayment,
duplicate payment, refunds, discounts or adjustments due to any private sector healthcare cost reimbursement program or insurance
coverage or in connection with Healthcare Programs, including Liabilities related to Cost Report settlement payables arising from
Cost Report periods ending prior to the Closing Date;

 

(f)       
any Liability related to claims of medical malpractice and/or other professional Liability of a Seller, or any of its employees,
attending physicians, agents or independent contractors;

 

(g)      
any Liability arising out of or in connection with any Legal Proceedings (whether instituted prior to or after Closing)
to the extent arising from acts or omissions which occurred or are alleged to have occurred prior to the Closing Date;

 

(h)      
any Liability related to penalties, fines, settlements, interest, costs and expenses to the extent arising out of or incurred
as a result of any violation by a Seller of any Law or Order;

 

(i)
all Liabilities relating to amounts required to be paid by Sellers hereunder;

 

(j)        
all claims, demands, Liabilities or obligations arising out of any duty or violation of any applicable Environmental Law,
rules, regulations or obligations by Sellers or the Business, or related to the Purchased Assets, including, but not limited to,
any release of Hazardous Materials occurring after the Closing Date if the Hazardous Materials were disposed of by or for Sellers
prior to the Closing Date;

 

(k)      
all Liabilities relating to Employees (including the termination thereof) and Employee Benefit Plans; and

 

(l)        
all Liabilities and obligations of Sellers to Purchaser under this Agreement or with respect to or arising out of the transactions
contemplated hereby.

 

1.5              
Assigned Contracts and Cure Amounts. Pursuant to Section 365 of the Bankruptcy Code, Sellers shall assign to Purchaser,
and Purchaser shall assume from Sellers, the Assigned Contracts listed in Schedule 1.1(d). The cure amounts, if any, as
determined by the Bankruptcy Court, necessary to allow assumption and assignment under Section 365 of the Bankruptcy Code of the
Assigned Contracts shall be

 

 

 

 

    	 	-4-	 

     

    

 

paid by Purchaser (or Purchaser
shall have delivered into escrow on terms reasonably acceptable to Sellers and Purchaser amounts sufficient to pay any claim therefore
that remains disputed as of the Closing, as such amount shall have been determined by the Bankruptcy Court) at or before the Closing
(except as otherwise agreed to by the other party to the Assigned Contracts), and, except as set forth below, Sellers shall have
no liability for any such cure amount. The cure amounts to be paid by Purchaser in accordance with the foregoing provisions of
this Section 1.5 are hereinafter sometimes referred to as the “Cure Amounts.” Notwithstanding anything to the contrary
herein, Purchaser’s obligation to pay Cure Amounts shall not exceed $0.00 in the aggregate (the “Cure Cap”).
Notwithstanding the foregoing, Purchaser, at its option, may elect to terminate this Agreement or to pay Cure Amounts in excess
of the Cure Cap; provided, however, Purchaser shall not have the right to terminate this Agreement with respect to any Contracts
added to Schedule 1.1(d) after the date hereof.

 

 1.6           Further Conveyances and Assumptions.

 

(a)               
From time to time following the Closing, each party shall, and shall cause their respective Affiliates to, execute, acknowledge
and deliver all such further conveyances, notices, assumptions, releases and acquaintances and such other instruments, and shall
take such further actions, as may be reasonably necessary or appropriate to convey and assign fully to Purchaser and its respective
successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to
be conveyed to Purchaser under this Agreement and Seller Documents and to assure fully to each Seller and its Affiliates and their
successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Purchaser under this Agreement
and Seller Documents, and to otherwise make effective the transactions contemplated hereby and thereby. In the event that Purchaser
or its Affiliates receives any Excluded Assets (or any payments or proceeds related thereto) following the Closing, Purchaser
shall promptly deliver such Excluded Assets (or any payments or proceeds related thereto) to Sellers. In the event that any Seller
or its Affiliates receives any Purchased Assets (or any payments or proceeds related thereto) following the Closing, such Seller
shall promptly deliver such Purchased Assets (or any payments or proceeds related thereto) to Purchaser.

 

(b)               
To the extent that the assignment of any Purchased Asset shall require the consent of any other party and such consent
shall still be required notwithstanding the Sale Order and Sections 363 and 365 of the Bankruptcy Code (each, a “Nonassignable
Asset”), nothing in this Agreement nor the consummation of the transactions contemplated hereby shall be construed as
an attempt or agreement to assign such Nonassignable Asset unless and until such consent shall have been obtained. If any such
consent is not obtained, or if an attempted assignment would adversely affect the rights or increase the obligations of Purchaser
such that Purchaser would not receive all such rights as they exist prior to such attempted assignment, Sellers and Purchaser
shall enter into such reasonable cooperative arrangements as are reasonably acceptable to Sellers and Purchaser to provide for
Purchaser the benefit of such Nonassignable Asset, and any transfer to Purchaser of any Nonassignable Asset.

 

1.7              
Bulk Sales Laws. The parties hereto hereby waive compliance by Sellers with the requirements and provisions of any
“bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the sale and transfer of
any or all of the Purchased Assets to Purchaser.

 

ARTICLE
II

CONSIDERATION

 

2.1               Purchase
Price. The consideration for the Purchased Assets shall be comprised of the following: (a) the Assumed Indebtedness; plus
(b) the assumption by Purchaser of the other Assumed Liabilities; plus (c) $600,000 (the “Cash
Purchase Price”); plus (d) the aggregate Cure Amounts (the “Purchase Price”).

 

 

 

 

    	 	-5-	 

     

    

 

2.2              
Deposit. As promptly as possible, but in any event within three (3) Business Days after the execution of this Agreement,
Purchaser shall deposit with the Law Offices of Craig M. Geno, PLLC in its capacity as escrow agent (the “Escrow Agent”),
pursuant to that certain Escrow Agreement, dated as of the date hereof, by and among Purchaser, Sellers and the Escrow Agent (the
“Deposit Escrow Agreement”) by wire transfer of immediately available funds, an amount equal to ten percent
(10%) of the Cash Purchase Price (the “Deposit Escrowed Funds”), such deposit to be released by the Escrow
Agent and delivered to either Purchaser or Sellers, in accordance with the provisions of the Deposit Escrow Agreement.

 

2.3              
Payment of Consideration. On the Closing Date, Purchaser shall pay to Sellers by wire transfer of immediately available
funds into accounts designated by Sellers, the Cash Purchase Price minus (a) the amount of the Deposit Escrowed Funds (which
shall be delivered to Sellers by the Escrow Agent as described in the Deposit Escrow Agreement), minus, (b) a portion of
the Cash Purchase Price equal to the sum of (i) 2% of the Purchase Price (the “Success Fee”) plus, (ii)
20% of the Purchase Price (the “Minimum Reserve Fee”) (the Success Fee and the Minimum Reserve Fee shall be
paid by the Purchaser on behalf of Sellers directly to Solic Capital Advisors, LLC at the Closing), plus (c) the aggregate
of the Cure Amounts (the “Closing Cash Payment”).

 

ARTICLE III

CLOSING
AND TERMINATION

 

3.1              
Closing Date. The closing of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities
provided for in Article I hereof (the “Closing”) shall take place remotely via electronic exchange of
documents and signature pages at 10:00 a.m. (Central time) on a date that is no less than two (2) Business Days following the
satisfaction or waiver of the conditions set forth in Article VIII (other than conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such conditions). The date on which the Closing shall be
held is referred to in this Agreement as the “Closing Date”. Unless otherwise agreed by Sellers and Purchaser
in writing, regardless of the time at which the Closing is completed, the Closing shall be deemed effective and all right, title
and interest of Sellers in any asset to be acquired by Purchaser hereunder, and any Assumed Liability and all risk of loss with
respect to the Business, shall be considered to have passed to Purchaser as of 12:01 a.m. (Central time) on the Closing Date.

 

3.2            
Deliveries by Sellers. At the Closing, Sellers shall deliver to Purchaser:

 

(a)      
certificates of good standing of each Seller from the State of Mississippi and evidence of the qualification to do business
in the State of Tennessee;

 

(b)      
a true and complete copy of the certificate of formation or other governing document of Real Estate Seller and all amendments
thereto, certified by the State of Mississippi, dated within five Business Days prior to the Closing Date;

 

(c)      
true and complete copies of the operating agreement or similar governing documents of Real Estate Seller, certified by
an authorized officer of Real Estate Seller;

 

(d)      
true and complete copies of the resolutions of the board of directors (or other similar governing body) of Real Estate
Seller, certified by an authorized officer of Real Estate Seller, authorizing the execution, delivery and performance of this
Agreement and all instruments and documents to be delivered in connection herewith, and the transactions contemplated hereby;

 

 

 

 

    	 	-6-	 

     

    

 

(e)      
certificates from the secretary of each Seller as to the incumbency and signatures of each officer of such Seller executing
this Agreement and any other documents required under this Agreement;

 

(f)        
a duly executed bill of sale in substantially the form of Exhibit B hereto;

 

(g)      
a duly executed assignment and assumption agreement in substantially the form of Exhibit C hereto (the “Assignment
and Assumption Agreement”);

 

(h)      
A duly executed special warranty deed with respect to the Purchased Real Property substantially in the form of Exhibit
D hereto;

 

(i)        
[intentionally omitted];

 

(j)        
possession of the Medical Records, in the possession or control of Hospital Seller;

 

(k)
       [intentionally omitted];

 

(l)        
an affidavit in substantially the form of Exhibit E hereto, executed by Real Estate Seller, (and any similar affidavit
that may be required under state law);

 

(m)     
all instruments and documents reasonably required by the Title Company to issue a standard owner’s title insurance
policy with no exceptions other than Permitted Exceptions for the Purchased Real Property;

 

(n)      
a certificate of an authorized officer of each Seller certifying that each of the conditions contained in Section 8.1
has been fulfilled;

 

(o)
[intentionally omitted]; and

 

(p)      
a certified copy of the Sale Order having been entered by the Bankruptcy Court and docketed, in form and substance reasonably
acceptable to Purchaser and Hospital Seller.

 

3.3           Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Sellers:

 

(a)      
the Closing Cash Payment as set forth in Section 2.3 hereof;

 

(b)      
a duly executed Assignment and Assumption Agreement;

 

(c)      
a certificate of good standing of Purchaser from the State of Florida, together with evidence of Purchaser’s qualifications
to do business in the State of Tennessee;

 

(d)      
true and complete copies of the certificate of incorporation of Purchaser and all amendments thereto, certified by the
State of Florida, dated within five (5) Business Days prior to the Closing Date;

 

(e)      
true and complete copies of the resolutions of the board of directors of Purchaser and Rennova, or similar governing body,
certified by Purchaser’s and Rennova’s secretary, as applicable, authorizing the execution, delivery and performance
of this Agreement and all instruments and documents to be delivered in connection herewith, and the transactions contemplated
hereby by Purchaser and Rennova;

 

 

 

 

    	 	-7-	 

     

    

 

(f)       
certificates from the secretary of Purchaser and Rennova, as applicable, as to the incumbency and signatures of each officer
of Purchaser and Rennova executing this Agreement and any other documents required under this Agreement;

 

(g)      
[intentionally omitted];

 

(h)      
a certificate of an officer of Purchaser certifying that each of the conditions contained in Section 8.2 has been
fulfilled; and

 

(i)
       such other documents, instruments and certificates as Sellers may reasonably request.

 

3.4              
Termination of Agreement. In respect of the Contemplated Transactions, this Agreement may be terminated prior to
the Closing as follows:

 

(a)      
Termination by Purchaser. Purchaser may terminate this Agreement upon the occurrence of any of the following:

 

(i)         if any of the conditions to the obligations of Purchaser to close that are set forth in Sections 8.1 and 8.3
(other than those that are to be satisfied at Closing) shall have become incapable of fulfillment other than as a result of
a breach by Purchaser of any representation, warranty, covenant or agreement contained in this Agreement, and such condition is
not waived by Purchaser;

 

(ii)          if there shall be a material breach by Sellers of any representation or warranty, or if Sellers shall fail to perform in
any material respect any covenant or agreement contained in this Agreement which breach or nonperformance cannot be cured or has
not been cured within ten (10) Business Days after the giving of written notice by Purchaser to Sellers of such breach or nonperformance;

 

(iii)          
if Purchaser elects to terminate in accordance with Section 1.5 hereof;

 

(iv)          if either or both of the Sellers enter into a definitive agreement with a third party for an Alternative Transaction;

 

(v)           if the Bankruptcy Court enters any Order approving any Alternative Transaction or confirming any Chapter 11 Plan involving
any Alternative Transaction;

 

(vi)          so long as Purchaser is not then in breach of its obligations under this Agreement in any material respect, if the Sale
Order is not entered within forty-five (45) days after the date hereof;

 

(vii)        
conversion of the Bankruptcy Case to one under Chapter 7 of the Bankruptcy Code;

 

(viii)        
[intentionally omitted]; or

 

(ix)           upon written notice to Sellers if the Closing shall not have occurred by the close of business on December 31, 2016 (the
“Outside Date”).

 

 

 

 

    	 	-8-	 

     

    

 

(b)      
Termination by Sellers. Sellers may terminate this Agreement upon the occurrence of any of the following:

 

(i)           if
any of the conditions to the obligations of Sellers to close that are set forth in Sections 8.2 and 8.3 (other than
those that are to be satisfied at Closing) shall have become incapable of fulfillment other than as a result of a breach by Sellers
of any representation, warranty, covenant or agreement contained in this Agreement, and such condition is not waived by Sellers;
or

 

(ii)          if there shall be a material breach by Purchaser of any representation or warranty, or if Purchaser shall fail to perform
in any material respect any covenant or agreement contained in this Agreement, which breach or nonperformance cannot be cured
or has not been cured within ten (10) Business Days after the giving of written notice by Sellers to Purchaser of such breach
or nonperformance.

 

(c)      
Termination by Purchaser or Hospital Seller. Either Purchaser or Hospital Seller may terminate this Agreement upon
the occurrence of any of the following:

 

(i)           by
mutual written consent of Hospital Seller and Purchaser; or

 

(ii)          if the Bankruptcy Court shall enter an order approving a Competing Bid or Alternative Transaction, provided that such termination
shall be contingent upon Purchaser’s right to payment of the Purchaser Termination Fee in accordance with this Agreement.

 

(d)       [intentionally omitted].

 

3.5              
Procedure For Termination. In the event of termination of this Agreement by Purchaser or either Seller, or both,
pursuant to Section 3.4, written notice thereof shall forthwith be given to the other parties, and upon the giving of such
notice (or at such time as specified in the particular termination right set forth in Section 3.4), the Contemplated Transactions
shall be abandoned and this Agreement shall terminate to the extent and with the effect provided by Section 3.6 without
further action by the parties.

 

3.6              
Effect of Termination. In the event that this Agreement is validly terminated as provided herein, then each of the
parties shall be relieved of its duties and obligations arising under this Agreement after the date of such termination and such
termination shall be without liability to any party; provided, however, that nothing in this Section 3.6 shall
relieve the parties of any liability for a breach of this Agreement prior to the date of termination; and provided, further,
however, that the obligations of the parties set forth in the Deposit Escrow Agreement and Sections 2.2, 3.6,
6.4 and 6.5 of this Agreement, and to the extent necessary to effectuate the foregoing enumerated provisions, Section
10.2, shall survive any such termination and shall be enforceable in accordance with their terms. In addition, if this Agreement
is terminated as provided herein, each party shall upon request redeliver or destroy as soon as practicable any or all documents,
work papers and other material of any other party relating to its business or affairs or the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing the same, other than any material which is of public
record.

 

 

 

 

 

 

 

    	 	-9-	 

     

    

 

ARTICLE IV

REPRESENTATIONS
AND WARRANTIES OF SELLERS

 

Each Seller hereby represents and warrants to Purchaser
that:

 

4.1              
Organization and Good Standing. Each Seller is a limited liability company duly organized or formed, validly existing
and in good standing under the laws of the jurisdiction of its organization or formation, with full limited liability company
power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports
to own or use, and to execute and deliver this Agreement and perform its obligations hereunder. Each Seller is duly qualified
to do business and is in good standing in every domestic or foreign jurisdiction in which its ownership of property or the conduct
of businesses as now conducted requires it to qualify, except with the failure to be so qualified would not be material to such
Seller or have a material and adverse effect on such Seller’s ability to perform its obligations under this Agreement or
to consummate the transactions contemplated hereby. Complete and accurate copies of the organizational documents of each Seller
have been delivered to Purchaser.

 

4.2            Authorization of Agreement; No Conflict.

 

(a)      
Except for such authorization as is required by the Bankruptcy Court (as hereinafter provided for) each Seller has all
requisite power and authority to execute and deliver and perform its obligations under and has taken all limited liability company
action, including approval of its directors, members and/or trustees (as applicable), necessary, if any, for it to validly execute
and deliver and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) perform its obligations
under this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement to be executed
and delivered by such Seller in connection with this Agreement.

 

(b)      
Except as set forth on Schedule 4.2(b), neither the execution and delivery of this Agreement by Sellers nor the
consummation or performance of the transactions contemplated hereby by Sellers will, directly or indirectly (with or without notice
or lapse of time): (i) contravene, conflict with or result in a violation of any provision of the organizational documents of
any Seller; (ii) contravene, conflict with, or result in a violation of any Law or any Order of any Governmental Body, to which
any Seller is subject; (iii) contravene, conflict with or result in a violation of any of the terms or requirements of, or give
any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any government authorization that is
held by any Seller or that otherwise relates to the Purchased Assets; (iv) breach any provision of, give any Person the right
to declare a default or exercise any remedy under, accelerate the maturity or performance of or payment under, or cancel, terminate
or modify any, Assigned Contract; or (v) result in the creation or imposition of any Lien upon any of the Purchased Assets.

 

4.3          
Intentionally Omitted.

 

4.4          
Title to Purchased Assets; Condition and Adequacy. Except as set forth in Schedule 4.4 and other than the
Real Estate, Hospital Seller owns good and transferable title to all of the Purchased Assets free and clear of any Liens, other
than Permitted Exceptions.

 

4.5          
Litigation.

 

(a)      
Except for proceedings before the Bankruptcy Court or Legal Proceedings that have been stayed as set forth on Schedule
4.5, there are no Legal Proceedings pending (i) by or against any Seller or that otherwise relate to or may affect the Business
or any of the Purchased Assets or (ii) that challenge, or that may have the effect of preventing, delaying, making illegal or
otherwise interfering with, the transactions contemplated hereby. To the Knowledge of each Seller, no such Legal Proceeding has
been threatened, in writing, except as set forth on Schedule 4.5.

 

 

 

 

    	 	-10-	 

     

    

 

(b)      
Except for proceedings before the Bankruptcy Court, there are no Orders outstanding (i) against any Seller or that otherwise
relate to or may affect the Business of Sellers or any of the Purchased Assets or (ii) that challenge, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, the transactions contemplated hereby.

 

4.6              
Permits. Prior to the closure of the Hospital on June 26, 2016, the Hospital was eligible to receive payment certified
as a Medicare Critical Access Hospital pursuant to 42 CFR Part 485, Subpart F. Hospital Seller’s hospital license from the
Tennessee Department of Health has been placed on “inactive” status until the February 2017 meeting of the Tennessee
Board for Licensing Health Care Facilities.

 

4.7              
Environmental Matters. Except as set forth on Schedule 4.7 hereto:

 

(a)               
No Seller is the subject of any outstanding Order, notice, directive or other writing from or Contract with any Governmental
Body respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Release or threatened Release, in each case, relating
to the operation of the Business or to any Purchased Asset; and

 

(b)               
To the Knowledge of each Seller, such Seller has not received any written communication or other notice alleging that such
Seller may be in violation of any Environmental Law, or any Permit issued pursuant to any Environmental Law, or may have any liability
under any Environmental Law, in each case related to the Business or to any Purchased Assets.

 

(c)               
To the Knowledge of each Seller, (i) no Hazardous Material has been Released at, on, under, to or from any Real Estate
in an amount, manner or condition that, and (ii) no friable asbestos is contained in any equipment or any building materials at
any Real Estate that in its current state, in the case of each of clauses (i) and (ii), would reasonably be expected to result
in material liabilities under Environmental Law.

 

4.8              
Insurance Policies. Schedule 4.8 sets forth a complete and accurate list of all insurance policies under which any
of the assets or properties of any Seller are covered or otherwise relating to the Business, and indicates the insurer’s
name, policy number, expiration date, amount and type of coverage.

 

4.9              
Real Property. Real Estate Seller represents and warrants that (a) Schedule 4.9 sets forth a correct street
address of each parcel of Real Estate and (b) Real Estate Seller is not a party to any Real Property Lease other than the lease
of the Real Estate to Hospital Seller, as tenant. Hospital Seller represents that Schedule 4.9 sets forth a list of all
Real Property Leases to which Hospital Seller is a party. Except for the Real Estate and the lease of the Real Estate to Hospital
Seller, as tenant, Real Estate Seller does not own any interest (fee, leasehold or otherwise) in any real property. Except for
the Real Property Leases described in Schedule 4.9, Hospital Seller does not own any interest (fee, leasehold or otherwise)
in any real property. Except as set forth in Schedule 4.9, Real Estate Seller owns good and marketable title to the Real
Estate, free and clear of any Liens other than the Permitted Exceptions.

 

4.10          
Intentionally Omitted.

 

4.11          
Intentionally Omitted.

 

 

 

 

 

 

    	 	-11-	 

     

    

 

4.12          
Intentionally Omitted.

 

4.13          
Employees. Hospital Seller has terminated all Employees.

 

4.14          
Intentionally Omitted.

 

4.15          
Reimbursement.

 

(a)               
To the Knowledge of each Seller, neither Sellers nor any of Sellers’ managers, equity holders or managing employees
is excluded from participation in any Healthcare Program, and no Seller has received any written notice from the applicable Governmental
Body that any such exclusion is threatened.

 

(b)               
Hospital Seller’s provider agreement with Medicare will be voluntarily terminated on the effective date of the Closing.

 

4.16          
Intentionally Omitted.

 

4.17          
Intentionally Omitted.

 

4.18           Brokers
or Finders. Except as set forth on Schedule 4.18, neither Sellers nor any of their respective officers, directors,
employees or agents have incurred any liability or obligation for brokerage or finders’ fees or agents’ commissions
or other similar payment in connection with the sale of the Purchased Assets or the transactions contemplated hereby.

 

ARTICLE V

REPRESENTATIONS AND
WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to Sellers
that:

 

5.1              
Organization and Good Standing. Purchaser is a corporation duly organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization or formation, with full power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to execute and deliver
this Agreement and perform its obligations hereunder. Purchaser is duly qualified to do business and is in good standing in every
domestic or foreign jurisdiction in which its ownership of property or the conduct of businesses as now conducted requires it
to qualify, except when the failure to be so qualified would not have a material and adverse effect on Purchaser’s ability
to perform its obligations under this Agreement or consummate the transactions contemplated hereby.

 

5.2              
Authorization of Agreement. Purchaser has full corporate power and authority to execute and deliver this Agreement
and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by it in connection
with the consummation of the transactions contemplated hereby and thereby (the “Purchaser Documents”) and to
consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement
and Purchaser Documents have been duly authorized by all necessary corporate action on behalf of Purchaser. Upon the execution
and delivery by Purchaser of this Agreement and the Purchaser Documents, this Agreement and the Purchaser Documents (assuming
the due authorization, execution and delivery by the other parties hereto and thereto) will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

 

 

 

    	 	-12-	 

     

    

 

5.3           Conflicts; Consents of Third
Parties.

 

(a)      
Except as described on Schedule 5.3(a), Purchaser is not required to obtain any consent, approval, authorization,
waiver, Order, license or Permit of or from, or to make any declaration or filing with, or to give any notification to, any Person
(including any Governmental Body) in connection with the execution and delivery of this Agreement or the Purchaser Documents by
Purchaser, the compliance by Purchaser with any of the provisions hereof or thereof; the consummation of the transactions contemplated
hereby or thereby or the taking by Purchaser of any other action contemplated hereby or thereby.

 

(b)      
Except as set forth on Schedule 5.3(b), none of the execution and delivery by Purchaser of this Agreement or any
of the Purchaser Documents, the consummation of the Contemplated Transactions by Purchaser or compliance by Purchaser with any
of the provisions hereof or thereof will conflict with, or result in any violation of or a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination or cancellation under any provision of, any Contract or
Permit to which Purchaser is a party or by which any of the properties or assets of Purchaser are bound, other than any such conflicts,
violations, defaults, terminations or cancellations that would not have a material and adverse effect on the ability of Purchaser
to perform its obligations under this Agreement or consummate the transactions contemplated hereby.

 

5.4              
Litigation. There are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened against Purchaser,
or, to the Knowledge of Purchaser, to which Purchaser otherwise is a party before any Governmental Body, which, if adversely determined,
would reasonably be expected to have a material and adverse effect on the ability of Purchaser to perform its obligations under
this Agreement or consummate the transactions contemplated hereby. Other than as set forth in Schedule 5.4, Purchaser is
not subject to any Order of any Governmental Body except to the extent the same would not reasonably be expected to have a material
and adverse effect on the ability of Purchaser to perform its obligations under this Agreement or consummate the transactions
contemplated hereby.

 

5.5              
Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser
in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like
payment in respect thereof.

 

5.6              
Financial Ability to Close. Purchaser has sufficient funds in cash or from existing available borrowing capacity
in an amount equal to the Cash Purchase Price presently available and will at the Closing have immediately available funds in
cash or from existing available borrowing capacity which are sufficient to pay the Cash Purchase Price and to pay any other amounts
payable by Purchaser pursuant to this Agreement and to consummate the transactions contemplated by this Agreement. Purchaser has
provided Sellers with evidence of the availability of such funds.

 

ARTICLE VI

BANKRUPTCY
COURT MATTERS

 

6.1              
Bankruptcy Status. Hospital Seller shall be and remain throughout the term of this Agreement a debtor and debtor-in-possession
in Chapter 11 bankruptcy proceedings in the Bankruptcy Case.

 

 

 

 

 

    	 	-13-	 

     

    

 

6.2              
Bankruptcy Court Filings. As promptly as practicable following the execution of this Agreement, but in no event
later than two (2) Business Days after the execution of this Agreement, Hospital Seller shall file the Sale Motion and subsequently
use its best efforts to seek the approval of the Bankruptcy Court of the Sale Order. Purchaser agrees that it will promptly take
such actions as are reasonably requested by Hospital Seller to assist in obtaining entry of the Sale Order and a finding of adequate
assurance of future performance by Purchaser, including, without limitation, furnishing affidavits or other documents or information
for filing with the Bankruptcy Court for the purposes, among others, of providing necessary assurances of performance by Purchaser
under this Agreement and demonstrating that Purchaser is a “good faith” purchaser under Section 363(m) of the Bankruptcy
Code. In the event the entry of the Sale Order shall be appealed, each party shall use their respective commercially reasonable
efforts to defend against such appeal. In the event that an appeal is taken, or a stay pending appeal is requested from the Sale
Order, Sellers shall promptly notify Purchaser of such appeal or stay request and shall provide Purchaser within three (3) Business
Days a copy of the relevant notice of appeal or order of stay. Sellers shall also provide Purchaser with written notice of any
motion or application filed in connection with any appeal from either of such orders. If no stay pending appeal is granted, the
Purchaser and the Sellers may mutually determine to close the Contemplated Transactions.

 

6.3              
Notice. Notice of the Contemplated Transactions, the Sale Motion and the Sale Order shall be in a form reasonably
acceptable to Purchaser and Hospital Seller and shall be served by the Hospital Seller to the reasonable satisfaction of Purchaser
in accordance with applicable Law (including, to the extent applicable, Rules 2002, 3016, 3017 and 6004 of the Federal Rules of
Bankruptcy Procedure and any local rules or orders of the Bankruptcy Court) on all Persons required to receive notice under applicable
Law.

 

6.4              
Competing Transaction.

 

(a)      
This Agreement is subject to approval by the Bankruptcy Court and the consideration by Hospital Seller of higher or otherwise
better competing bids (each a “Competing Bid”).

 

(b)      
[Intentionally Omitted].

 

(c)      
Until the Contemplated Transactions are consummated, and subject to the bid procedures set forth in Section 6.4(d), Hospital
Seller is permitted to cause its Representatives to market and initiate contact with, solicit or encourage submission of any inquiries,
proposals or offers by, any Person (in addition to Purchaser and its Representatives) in connection with any sale or other disposition
of all or any part of the Purchased Assets, alone or in connection with the sale or other disposition of any other asset of such
Seller. In addition, during such time period, each Seller has the responsibility and obligation to respond to any inquiries or
offers to purchase all or any part of the Purchased Assets and perform any and all other acts related thereto which are required
under the Bankruptcy Code or other applicable law, including supplying information relating to the Business and the assets of
such Seller to prospective purchasers.

 

(d)        
Seller agrees to the following bid procedures and shall use its best efforts to cause such procedures to be adhered to
and, if necessary, approved by the Bankruptcy Court:

 

(i)              initial
minimum overbid by a Competing Bid of $100,000 (the Purchaser Termination Fee of $50,000 plus the incremented bid of $50,000 as
set forth below);

 

(ii)            
incremented bids by Qualified Bidders of no less than $50,000;

 

(iii)           
right of Purchaser to credit bid its Purchaser Termination Fee;

 

 

 

 

    	 	-14-	 

     

    

 

(iv)
          payment of the Purchaser Termination Fee, if applicable, in accordance
with Section 6.5;

 

(v)           
deadline to qualify Competing Bids of a date no later than November 2, 2016;

 

(vi)          
conducting an auction in the event of any qualified Competing Bids no later than November 15, 2016; and

 

(vii)          
commencement of a hearing before the Bankruptcy Court to approve the Transaction and seek entry of Sale Order no later
than November 30, 2016.

 

6.5              
Purchaser Termination Fee. Sellers agree and acknowledge that Purchaser’s negotiation and execution of this
Agreement have required a substantial investment of management time and significant commitment of financial and other resources
of Purchaser, and that the negotiation and execution of this Agreement have provided significant value to Sellers. Therefore,
if the Bankruptcy Court fails to approve this Agreement because another offer for the purchase of the Business has been received
and is approved by the Bankruptcy Court, then, in such event, and if thereafter any Purchaser Termination Event (as hereinafter
defined) occurs, Sellers will pay to Purchaser a termination fee, which will include reimbursement of Purchaser’s costs
and expenses in connection with the negotiation of and activities incident to this Agreement, in an amount equal to $50,000 (the
“Purchaser Termination Fee”). The Purchaser Termination Fee will be paid upon the closing of the sale of the
Business (or of the Purchased Assets thereof) to a third party. A Purchaser Termination Event means the consummation of any Alternative
Transaction including a sale of all or a substantial portion of the Purchased Assets by a Competing Bid from a party other than
the Purchaser, or the confirmation of any Chapter 11 Plan, within 180 days of the execution of this Agreement. Sellers shall pay
the Purchaser Termination Fee on the earlier of (a) the date of the consummation of an Alternative Transaction or (b) on the effective
date of the confirmation by the Bankruptcy Court of any Chapter 11 Plan, such date not to exceed fifteen (15) days from the date
of such confirmation. Sellers’ obligation to pay the Purchaser Termination Fee shall constitute and be treated as a superpriority
administrative expense of Sellers under Sections 503(b) and 507(b) of the Bankruptcy Code and paid in cash immediately when due.
The parties agree that such sum is a reasonable estimate of Purchaser’s costs, expenses, and loss, and is fair consideration
to induce Purchaser to enter into this Agreement.

 

ARTICLE VII

COVENANTS

 

7.1              
Access to Information. Subject to the provisions of this Section 7.1, each Seller agrees that, prior to the
Closing Date, Purchaser shall be entitled, through its Representatives, to make such investigation of the assets, properties and
operations of the Business, including a survey and inspection of the Real Estate and the Facilities, and such examination of the
books and records of Sellers pertaining to the Business, the Purchased Assets and the Assumed Liabilities as it reasonably requests
and to make extracts and copies of such books and records. Any such investigation and examination shall be conducted during regular
business hours upon reasonable advance notice and under reasonable circumstances. Each Seller shall cause its Representatives
to cooperate with Purchaser and its Representatives in connection with such investigation and examination, and Purchaser and its
Representatives shall cooperate with each Seller and its Representatives and shall use its commercially reasonable efforts to
minimize any disruption to Sellers’ business and operations, including the Business. Notwithstanding the foregoing, if permitted
by applicable Law, Sellers shall disclose to Purchaser the subject matter of the information or books, records or Documents not
required to be made available hereunder and why such items should not be delivered. If requested by Purchaser, Sellers shall seek
such consents as may be needed to enable Sellers to make such information available to Purchaser.

 

 

 

 

    	 	-15-	 

     

    

 

7.2          
Conduct of the Business Pending the Closing.

 

(a)      
Prior to the Closing, except (1) as required by applicable Law or the Bankruptcy Court, (2) as otherwise expressly contemplated
by this Agreement or (3) with the prior written consent of Purchaser (which consent shall not be unreasonably withheld, delayed
or conditioned):

 

(i)                        
Real Estate Seller shall maintain the insurance coverage currently in place with respect to the Real Estate (or comparable
replacement coverage); and

 

(ii)                        
Hospital Seller shall comply in all material respects with all Laws and Orders pertaining to the Business.

 

(b)      
Except (1) as required by applicable Law or the Bankruptcy Court, (2) as otherwise expressly contemplated by this Agreement
or (3) with the prior written consent of Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned),
no Seller shall, solely as it relates to the Business:

 

(i)                        
subject any of the Purchased Assets to any Lien (other than Permitted Exceptions);

 

(ii)                        
acquire or lease any material properties or assets or sell, assign, license, transfer, convey, lease or otherwise dispose
of any assets of the type that would be of the Purchased Assets (except pursuant to an existing (as of the date of this Agreement)
Contract for fair consideration in the Ordinary Course of Business or for the purpose of disposing of obsolete or worthless assets);

 

(iii)                       
[intentionally omitted];

 

(iv)                      
[intentionally omitted];

 

(v)                       
[intentionally omitted]; or

 

(vi)                      agree to do anything prohibited by this Section 7.2(b).

 

7.3              
Consents and Permits; Insurance. Each Seller shall use its commercially reasonable efforts, and Purchaser shall
cooperate with Sellers, including, without limitation, by taking the actions referred to in Section 7.4, to obtain at the
earliest practicable date all consents, approvals, authorizations, waiver and Orders required to be obtained by Sellers and to
give at the earliest practicable date any notices required to be given by Sellers, in order for Sellers to consummate the transactions
contemplated by this Agreement on the terms and in the manner provided hereby. Purchaser shall use its commercially reasonable
efforts, and Sellers shall cooperate with Purchaser, including by taking the actions referred to in Section 7.4 to obtain
at the earliest practicable date all consents, approvals, authorizations, waivers, Orders, licenses and Permits required to be
obtained by Purchaser, and to give at the earliest practicable date any notices required to be given by Purchaser, in order for
Purchaser to consummate the transactions contemplated by this Agreement on the terms and in the manner provided hereby and to
operate the Business after the Closing; provided, however, that Sellers shall not be obligated to pay any consideration
therefor to any third party from whom any such item is requested or to initiate any litigation or legal proceedings to obtain
any such consent or approval except as otherwise provided by Section 7.4.

 

 

 

    	 	-16-	 

     

    

 

7.4            
Regulatory Approval.

 

(a)      
The parties recognize and agree that time is of the essence for the closing of the Contemplated Transactions. Purchaser
and Sellers will cooperate in making all required notices and applications, so that the parties may receive all approvals required
to consummate the Contemplated Transactions.

 

(b)      
Each party shall use its reasonable efforts to furnish to each other all information required for any application or other
filing to be made pursuant to any applicable Law in connection with the Contemplated Transactions contemplated by this Agreement.
Each such party shall promptly inform the other parties of any material oral communication with, and provide copies of written
communications with, any Governmental Body regarding any such filings or any such transaction. No such party shall independently
participate in any formal meeting with any Governmental Body in respect of any such filings, investigation, or other inquiry without
giving the other parties prior notice of the meeting and, to the extent permitted by such Governmental Body, the opportunity to
attend and/or participate.

 

7.5              
Further Assurances. Each party shall use its reasonable efforts to (i) take all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date
of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement. Notwithstanding
anything herein to the contrary, Purchaser hereby acknowledges that Hospital Seller’s hospital license issued by the Tennessee
Department of Health has been placed on “inactive” status until the February 2017 meeting of the Tennessee Board for
Licensing Health Care Facilities and the understands that the any transfer, if possible, of the license shall be the sole responsibility
of Purchaser.

 

7.6              
Confidentiality. From and after the date hereof, Purchaser shall, and shall cause its Representatives to maintain
in confidence, not disclose to any third party, except as necessary to effect the Contemplated Transactions, without the prior
written consent of Sellers, and not use to the detriment of any Seller, any Seller Confidential Information relating to or obtained
from any Seller or its Representatives; provided, however, if Purchaser, its Representatives or anyone to whom such
parties have transmitted any Seller Confidential Information become legally compelled to disclose any such Seller Confidential
Information, Purchaser shall provide the respective Seller with prompt notice of such legal obligation. Upon the Closing by Purchaser,
the restrictions contained in this Section 7.6 shall not apply to confidential or proprietary information related primarily
to the Purchased Assets, the Assumed Liabilities or the Business and shall not apply to Purchaser’s actions to enforce any
rights or claims of Purchaser under this Agreement or performing Purchaser’s obligations under this Agreement. Purchaser
may disclose any Seller Confidential Information to its Representatives who need to know it for the purpose of effectuating the
Contemplated Transactions. Purchaser shall inform its Representatives having access to Seller Confidential Information of such
obligation of confidentiality.

 

7.7              
Intentionally Omitted.

 

7.8              
Publicity. Except in connection with the Bankruptcy Case, each of party agrees that it shall not issue any written
press release concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of
either Purchaser or Sellers, as applicable, which approval will not be unreasonably withheld, delayed or conditioned, unless,
in the judgment of such issuing party upon advice of counsel, disclosure is otherwise required by applicable Law or by the Bankruptcy
Court with respect to filings to be made with the Bankruptcy Court in connection with this Agreement; provided, that such
party that intends to make such release shall use its commercially reasonable efforts consistent with such applicable Law or Bankruptcy
Court requirement to consult with the other parties with respect to the text thereof.

 

 

 

    	 	-17-	 

     

    

 

7.9           
Intentionally Omitted.

 

7.10          
Intentionally Omitted.

 

7.11          
Cooperation. Each Seller and Purchaser agrees to reasonably cooperate with each other, from the date hereof up through
and following the Closing Date, in good faith, in an effort to satisfy all further conditions, undertakings and agreements contained
in this Agreement.

 

7.12         
Intentionally Omitted.

 

7.13         
Intentionally Omitted.

 

7.14          
Misdirected Payments, Etc. Purchaser and Sellers covenant and agree to remit, with reasonable promptness, to the
other any payments received by them or their affiliates, which payments are on or in respect of accounts or notes receivable owned
by (or are otherwise payable to) Sellers or Purchaser, as applicable.

 

7.15          
Notice of Developments. Sellers and Purchaser will give prompt written notice to the other party of any facts that
become known or any development that constitutes or causes a breach of any representation, warranty or agreement herein; provided
that no disclosure shall be deemed to supplement any schedule or prevent or cure any breach or misrepresentation.

 

7.16           Release
of Guarantor. Purchaser shall use commercially reasonable efforts to obtain a release of
the guarantor under the First Deed of Trust upon assumption by Purchaser of the First Deed of Trust.

 

7.17          
Non-Competition.

 

(a)      
In partial consideration of Purchaser’s agreement to assume and agree to pay the Purchase Price and pay, perform
and discharge when due, and hold Sellers harmless from and against, the Assumed Liabilities, each Seller agrees that without Purchaser’s
prior written consent, (x) during the period commencing on the Closing Date and ending on the fifth (5th) anniversary of the Closing
Date and so long as Purchaser continues to operate the Hospital, they shall not (i) engage in the operation of any Competing Business
within a thirty-five (35) mile radius of the Hospital (the “Restricted Area”), or (ii) acquire, lease, own or be a
shareholder, partner, member or equity holder of, exercise management control over, provide consulting services for, or acquire
or maintain a controlling interest in, any Competing Business that is located in the Restricted Area. For purposes of this Section,
the term “Competing Business” means the business of owning and operating hospitals, ambulatory surgical centers, medical
clinics, freestanding emergency rooms, urgent care clinics, behavioral health centers and all other healthcare facilities and
services.

 

(b)       Sellers
recognize that the covenants in this Section 7.17, and the territorial, time and other limitations with respect
thereto, are reasonable and properly required for the adequate protection of the acquisition of the Business by
Purchaser, and agree that such limitations are reasonable with respect to its activities, business and public purpose.
Sellers agree and acknowledge that the violation of the covenants or agreements in this Section 7.17 would cause
irreparable injury to Purchaser and that the remedy at law for any violation or threatened violation thereof would be
inadequate and that, in addition to whatever other remedies may be available at law or in equity, Purchaser shall be entitled
to temporary and permanent injunctive or other equitable relief without the necessity of proving actual damages or posting
bond. The parties hereto also waive any requirement of proving actual damages in connection with the obtaining of any such
injunctive or other equitable relief. In addition to any injunctive relief or specific performance, Purchaser may pursue such
other remedies to which it may be entitled under applicable Law.

 

 

 

    	 	-18-	 

     

    

 

ARTICLE
VIII

CONDITIONS TO CLOSING

 

8.1              
Conditions Precedent to Obligations of Purchaser. The obligations of Purchaser to consummate the Contemplated Transactions
as provided by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions
(any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):

 

(a)      
the representations and warranties of Sellers contained in this Agreement and in any document, instrument or certificate
delivered hereunder (i) that are not qualified by materiality will be true and correct in all material respects at and as of the
Closing with the same force and effect as if made as of the Closing and (ii) that are qualified by materiality will be true and
correct in all respects at and as of the Closing with the same force and effect as if made as of the Closing, in each case, other
than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct as
of such specified date or time;

 

(b)      
Sellers shall have performed and complied in all material respects with all obligations and agreements required in this
Agreement to be performed or complied with by them prior to the Closing Date;

 

(c)      
Purchaser shall have received a Phase I Environmental Site Assessment Report with respect to the Real Estate (which report
must cover mold, asbestos, radon and lead-based paint as well as environmental matters customarily addressed in a Phase I Environmental
Site Assessment Report), which report must be acceptable to Purchaser in its reasonable discretion;

 

(d)       
Intentionally Omitted;

 

(e)      
The Title Company shall have issued and delivered to Purchaser an irrevocable commitment for a standard owner’s title
insurance policy with no exceptions other than Permitted Exceptions that do not have a material and adverse effect on the ability
of Purchaser to conduct the Business for the Purchased Real Properties;

 

(f)       
Sellers shall have delivered, or caused to be delivered, to Purchaser all of the items set forth in Section 3.2;

 

(g)       
Intentionally Omitted;

 

(h)       
Intentionally Omitted;

 

(i)        
Intentionally Omitted; and

 

(j)        
Real Estate Seller shall have effectively assigned, with all required consents having been obtained, the Landing Rights
Agreement to Purchaser.

 

8.2              
Conditions Precedent to Obligations of Sellers. The obligation of Sellers to consummate the Contemplated Transactions
as provided by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions
(any or all of which may be waived by Sellers in whole or in part to the extent permitted by applicable Law):

 

 

    	 	-19-	 

     

    

 

 

(a)      
the representations and warranties of Purchaser contained in this Agreement and in any document, instrument or certificate
delivered hereunder (i) that are not qualified by materiality will be true and correct in all material respects at and as of the
Closing with the same force and effect as if made as of the Closing and (ii) that are qualified by materiality will be true and
correct in all respects at and as of the Closing with the same force and effect as if made as of the Closing, in each case, other
than representations and warranties that expressly speak only as of a specific date or time, which will be true and correct as
of such specified date or time;

 

(b)      
Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this
Agreement to be performed or complied with by them on or prior to the Closing Date; provided, however, that the
condition set forth in this Section 8.2(b) shall be deemed satisfied unless all such failures to so perform or comply taken
together prevent or materially delay the ability of Purchaser to perform its obligations under this Agreement or the ability of
Purchaser to consummate the Contemplated Transactions; and

 

(c)      
Purchaser shall have delivered, or caused to be delivered, to Sellers all of the items set forth in Section 3.3.

 

8.3              
Conditions Precedent to Obligations of Purchaser and Sellers. The respective obligations of the parties to consummate
the Contemplated Transactions as provided by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by Purchaser and Sellers in whole or in part to the extent
permitted by applicable Law):

 

(a)      
There shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the Contemplated Transactions;

 

(b)       
Intentionally Omitted; and

 

(c)      
The Bankruptcy Court shall have entered the Sale Order, and the Sale Order shall have become a Final Order not subject
to any stay.

 

8.4              
Frustration of Closing Conditions. No party may rely on the failure of any condition set forth in Sections 8.1,
8.2 or 8.3, as the case may be, to excuse it from consummating the Contemplated Transactions if such failure was
caused by such party’s failure to comply with any provision of this Agreement.

 

ARTICLE IX

TAXES

 

9.1              
Transfer Taxes. Purchaser shall pay any sales, use, stamp, documentary stamp, filing, recording, transfer or similar
fees or taxes or governmental charges (including any interest and penalty thereon) payable in connection with the transactions
contemplated by this Agreement, if any (“Transfer Taxes”). Sellers shall seek to include in the Sales Order
a provision that provides that the transfer of the Purchased Assets shall be free and clear of any Transfer Taxes under Bankruptcy
Code Section 1146(c). The parties shall cooperate and otherwise take commercially reasonable efforts to obtain any available refunds
for Transfer Taxes, including a refund available under Section 1146(c) of the Bankruptcy Code.

 

9.2              
Prorations. All real and personal property Taxes or similar ad valorem obligations
levied with respect to the Purchased Assets for any taxable period that includes the Closing Date and ends after the Closing Date,
whether imposed or assessed before or after the Closing Date, shall be prorated between Sellers and Purchaser as of 12:01
a.m. (Central time) on the day after the Closing Date. If any Taxes subject to pro-ration are paid by Purchaser, on the one hand,
and Sellers, on the other hand, the proportionate amount of such Taxes paid (or in the event of a refund of any portion of such
Taxes previously paid is received, such refund) shall be paid promptly by (or to) the other after the payment of such Taxes (or
promptly following the receipt of any such refund).

 

 

 

 

 

    	 	-20-	 

     

    

 

9.3              
Purchase Price Allocation. The Purchase Price shall be allocated between the Hospital Seller and the Real Estate
Seller as follows: (i) the Cash Purchase Price less an amount equal to any outstanding real estate Taxes owed with respect
to the Real Estate shall be allocated to the Hospital Seller and (ii) the Assumed Indebtedness plus an amount in cash equal
to the amount necessary to pay any outstanding real estate Taxes owed with respect to the Real Estate shall be allocated to the
Real Estate Seller. For tax purposes only, prior to the Closing Date, Sellers and Purchaser shall agree in good faith upon an
allocation of the purchase price and other consideration delivered hereunder (including the Assumed Liabilities) among the Purchased
Assets in accordance with Section 1060 of the Code and, in accordance with such allocation, Purchaser shall prepare and deliver
to Sellers copies of Form 8594 and any required exhibits thereto (the “Asset Acquisition Statement”). Purchaser
shall prepare and deliver to Sellers from time to time revised copies of the Asset Acquisition Statement (the “Revised
Statements”) so as to report any matters on the Asset Acquisition Statement that need updating (including purchase price
adjustments, if any) consistent with the agreed upon allocation. To the extent that Sellers disagree with Purchaser’s allocation
in the Asset Acquisition Statement or the Revised Statements, Sellers and Purchaser shall work in good faith to resolve any such
disagreements. If Purchaser and Sellers cannot reach a final resolution of the matter, Purchaser and Sellers will jointly retain
an independent financial expert to resolve any remaining disagreements, the cost of which shall be borne equally by the parties.
The purchase price for the Purchased Assets shall be allocated in accordance with the Asset Acquisition Statement or, if applicable,
the last Revised Statements, provided by Purchaser to Sellers, and all income Tax Returns and reports filed by Purchaser and Sellers
shall be prepared consistently with such allocation.

 

9.4              
Cooperation on Tax Matters. The parties shall furnish or cause to be furnished to each other, as promptly as practicable,
such information and assistance relating to the Purchased Assets and the Assumed Liabilities as is reasonably necessary for the
preparation and filing of any Tax Return, claim for refund or other filings relating to Tax matters, for the preparation for any
Tax audit, for the preparation for any Tax protest, for the prosecution or defense of any suit or other proceeding relating to
Tax matters.

 

ARTICLE
X

MISCELLANEOUS

 

10.1          
Expenses. Except as otherwise expressly provided in this Agreement, each party shall bear its own expenses incurred
in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby and thereby.

 

10.2          
Other Definitional and Interpretive Matters. Unless otherwise expressly provided, for purposes of this Agreement,
the following rules of interpretation shall apply:

 

(a)      
When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant
to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period
is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

(b)      
Any reference in this Agreement to $ shall mean U.S. dollars.

 

 

 

 

    	 	-21-	 

     

    

 

(c)      
All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Any matter or item disclosed on one Schedule shall be deemed to have been disclosed on each other
Schedule to the extent it is reasonably apparent that it is pertinent to the subject matter of such other Schedule. Any capitalized
terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

 

(d)      
Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall
include the plural and vice versa.

 

(e)      
The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting
this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement
unless otherwise specified.

 

(f)       
The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer
to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

 

(g)      
The word “including” or any variation thereof means “including, without limitation” and shall not
be construed to limit any general statement that it follows to the specific or similar items or matters immediately following
it.

 

(h)      
The phrase “made available to Purchaser” shall mean made available to Purchaser through posting in an electronic
data room, via email, facsimile or other electronic transfer or through other written means for all purposes of this Agreement.

 

(i)        
Intentionally Omitted.

 

(j)        
The parties hereto have been advised by experienced counsel, and have participated jointly, in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted in its entirety by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provision of this Agreement.

 

10.3          
Injunctive Relief. Damages at law may be an inadequate remedy for the breach of any of the covenants, promises and
agreements contained in this Agreement, and, accordingly, any party hereto shall be entitled to injunctive relief with respect
to any such breach, including specific performance of such covenants, promises or agreements or an order enjoining a party from
any threatened, or from the continuation of any actual breach of the covenants, promises or agreements contained in this Agreement.
The rights set forth in this Section 10.3 shall be in addition to any other rights which a party may have at law or in
equity pursuant to this Agreement.

 

10.4          
Submission to Jurisdiction; Consent to Service of Process. Without limiting any party’s right to appeal any
order of the Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of this Agreement
and to decide any claims or disputes which may arise or result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (ii) any and all proceedings related to the foregoing shall be filed and
maintained only in the Bankruptcy Court, and the parties hereby consent to and submit to the jurisdiction and venue of the Bankruptcy
Court and shall receive notices at such locations as indicated in Section 10.7 hereof. The parties hereby irrevocably waive,
to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of
any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any
suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 10.7.

 

 

 

 

    	 	-22-	 

     

    

 

10.5          
Entire Agreement: Amendments and Waivers. This Agreement (including the Disclosure Schedules and Exhibits hereto)
and the Deposit Escrow Agreement represent the entire understanding and agreement between the parties hereto with respect to the
subject matter hereof. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by
written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.
No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.

 

10.6          
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Mississippi
applicable to contracts made and performed in such State.

 

10.7          
Notice. All notices and other communications under this Agreement shall be in writing and shall be deemed given
(i) when delivered personally by hand (with written confirmation of receipt) or sent by facsimile (hard copy to follow) or (ii)
one business day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following
addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):

 

	If to Purchaser to:	If to Sellers, to:
	 	 
	Rennova Health, Inc.	Pioneer Health Services, Inc.
	Victoria Nemerson	110 Pioneer Way
	General Counsel	Magee, MS 39111
	400 South Australian Avenue	Attn: Scott Phillips
	West Palm Beach, FL 33401	          Michael Morgan
	Facsimile: (561) 584-6835	Facsimile:  (215) 689-4386
	 	 
	 	 
	With a copy (which shall not constitute notice) to:	With a copy (which shall not constitute notice) to:
	 	 
	Bass, Berry & Sims PLC	Law Offices of Craig M. Geno, PLLC
	150 Third Avenue S, Suite 2800	587 Highland Colony Pkwy
	Nashville, TN  37201	Ridgeland, MS 39157
	Attn: Elizabeth S. Warren	Attn: Craig M. Geno, Esq. 
	Facsimile: (615) 742-7719	Facsimile:  (601) 427-0050

 

 

 

 

    	 	-23-	 

     

    

 

	 	 
	 	With a copy (which shall not constitute notice) to:
	 	 
	 	Counsel to Unsecured Creditor’s Committee
	 	Arnall Golden Gregory LLP
	 	171 17th Street, NW
	 	Suite 2100
	 	Atlanta, Georgia 30338
	 	Attn: Darryl S. Laddin, Esq.
	 	Facsimile:  (404) 873-8121

 

10.8          
Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced
by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated
to the greatest extent possible.

 

10.9          
Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary
rights in any Person or entity not a party to this Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by any party (by operation of law or otherwise) without the prior written consent
of Purchaser and Sellers and any attempted assignment without the required consents shall be void; provided, however,
that Purchaser may assign its right to acquire any or all of the Purchased Assets and its other rights hereunder to an entity
wholly owned by it that also assumes all of Purchaser’s obligations hereunder (but such assumption shall not relieve Purchaser
of its obligations hereunder) with the consent of Sellers, which shall not be unreasonably withheld; and provided, further,
Purchaser may assign its right to acquire any or all of the Purchased Assets to a third Person at Closing. Upon any such permitted
assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.
No permitted assignment of any rights hereunder and/or assumption of obligations hereunder shall relieve the parties hereto of
any of their obligations.

 

10.10       
No Personal Liability. In entering into this Agreement, the parties understand, agree and acknowledge that no director,
trustee, officer, manager, member, employee, shareholder, attorney, accountant, advisor or agent of any party hereto shall be
personally liable or responsible to any other party or its Affiliates, directors, trustees, officers, managers, members, employees,
shareholders, attorneys, accountants, advisors or agents for the performance of any obligation under this Agreement of any party
to this Agreement or the truth, completeness or accuracy of any representation or warranty contained in, or statement made in,
this Agreement or any document prepared pursuant hereto and that all obligations hereunder are those of the named parties only
(but nothing contained herein shall limit the liability of any person for his or her fraudulent acts).

 

10.11       
Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

10.12        Acknowledgment
by Purchaser. Purchaser acknowledges that it has conducted to its satisfaction an independent investigation and
verification of the Purchased Assets, liabilities, properties and operations of Sellers and, in making its determination
to proceed with the transactions contemplated by this Agreement, Purchaser has relied on the results of its own independent
investigation and

 

 

 

 

 

    	 	-24-	 

     

    

 

verification and the representations and warranties of Sellers expressly and specifically set forth in this
Agreement, including the Disclosure Schedules. SUCH REPRESENTATIONS AND WARRANTIES BY SELLERS CONSTITUTE THE SOLE AND
EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLERS TO PURCHASER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND
PURCHASER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS
OR IMPLIED (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE ASSETS OR LIABILITIES OF SELLERS) ARE SPECIFICALLY DISCLAIMED
BY SELLERS. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN, THE PURCHASED ASSETS ARE BEING SOLD
“AS IS, WHERE IS, AND WITH ALL FAULTS,” AND SELLERS EXPRESSLY DISCLAIM ANY AND ALL OTHER REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	-25-	 

     

    

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written
above.

 

 

	SELLERS:	 	PIONEER HEALTH SERVICES OF ONEIDA LLC
	 	 	 
	 	 	 
	 	 	By: /s/ Scott Phillips                              
	 	 	Name: Scott Phillips
	 	 	Title: CRO
	 	 	 
	 	 	 
	 	 	PIONEER HEALTH SERVICES OF ONEIDA REAL ESTATE LLC
	 	 	 
	 	 	By: /s/ Joseph S. McNulty III                
	 	 	Name: Joseph S. McNulty III
	 	 	Title: Chairman/CEO
	 	 	 
	 	 	 
	PURCHASER:	 	RENNOVA HEALTH, INC.
	 	 	 
	 	 	 
	 	 	By: /s/ Seamus Lagan                           
	 	 	Name: Seamus Lagan
	 	 	Title: Chief Executive Officer

 

 

 

 

 

 

[SIGNATURE PAGE
TO ASSET PURCHASE AGREEMENT]

    	 	 	 

     

    

ANNEX 1

 

Defined Terms

 

Capitalized
terms used herein are defined as set forth below:

 

“Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract
or otherwise.

 

“Agreement”
shall have the meaning set forth in the Preamble of this Agreement.

 

“Alternative
Transaction” means any agreement or transaction involving the sale (in a single transaction or a series of related transactions)
of all or substantially all of the Purchased Assets, or the issuance or sale (in a single transaction or series of related transactions)
of all or substantially all of the equity interests, of Sellers or any of their successors, to any party other than Purchaser
or a designee of Purchaser.

 

“Asset
Acquisition Statement” shall have the meaning set forth in Section 9.3 of this Agreement.

 

“Assigned
Contracts” shall have the meaning set forth in Section 1.1(d) of this Agreement.

 

“Assignment
and Assumption Agreement” shall have the meaning set forth in Section 3.2(g) of this Agreement.

 

“Assumed
Indebtedness” shall have the meaning set forth in Section 1.3(a) of this Agreement.

 

“Assumed
Liabilities” shall have the meaning set forth in Section 1.3 of this Agreement.

 

“Bankruptcy
Case” means the voluntary petition for relief under Chapter 11 of the Bankruptcy Code filed by Seller on March 30, 2016
in the Bankruptcy Court, In re Pioneer Health Services of Oneida LLC, Case No. 16-01124-NPO, jointly administered with In re Pioneer
Health Services, Inc., Case No. 16-0119-NPO.

 

“Bankruptcy
Code” shall have the meaning set forth in the Recitals of this Agreement.

 

“Bankruptcy
Court” means the United States Bankruptcy Court for the Southern District of Mississippi.

 

“Business”
shall have the meaning set forth in the Recitals of this Agreement.

 

“Business
Day” means any day of the year on which national banking institutions in Tennessee are open to the public for conducting
business and are not required or authorized to close.

 

“Purchaser
Termination Fee” shall have the meaning set forth in Section 6.5 of this Agreement.

 

“Cash
Purchase Price” shall have the meaning set forth in Section 2.1 of this Agreement.

 

“Closing”
shall have the meaning set forth in Section 3.1 of this Agreement.

 

 

 

 

    	 	27	 

     

    

 

“Closing
Cash Payment” shall have the meaning set forth in Section 2.3 of this Agreement.

 

“Closing
Date” shall have the meaning set forth in Section 3.1 of this Agreement.

 

“CMS”
means the Centers for Medicare and Medicaid Services.

 

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

 

“Competing
Bid” shall have the meaning set forth in Section 6.4(a) of this Agreement.

 

“Competing
Business” shall have the meaning set forth in Section 7.17(a) of this Agreement.

 

“Contemplated
Transactions” shall have the meaning set forth in Section 1.1 of this Agreement.

 

“Contract”
means any written contract, indenture, note, bond, lease, license or other agreement, other than a real property lease, a personal
property lease or an Intellectual Property License.

 

“Copyrights”
means all copyrights and registrations and applications therefor and works of authorship, and mask work rights.

 

“Cost
Reports” means all cost and other reports filed pursuant to the requirements of Healthcare Programs for payment or reimbursement
of amounts due from such programs for services provided.

 

“Cure
Amounts” shall have the meaning set forth in Section 1.5 of this Agreement.

 

“Cure
Cap” shall have the meaning set forth in Section 1.5 of this Agreement.

 

“Deposit
Escrow Agreement” shall have the meaning set forth in Section 2.2 of this Agreement.

 

“Deposit
Escrowed Funds” shall have the meaning set forth in Section 2.2 of this Agreement.

 

“Documents”
means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts,
ledgers, journals, title policies, customer lists, regulatory filings, operating data and plans, technical documentation (design
specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation
guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers,
pamphlets, web pages, etc.), and other similar materials related to the Business or the Purchased Assets in each case whether
or not in electronic form, other than Patient Records.

 

“Employee
Benefit Plans” means all deferred compensation, incentive compensation, stock purchase, stock option or other equity-based,
retention, change in control, severance or termination pay, hospitalization or other medical, life, dental, vision, disability
or other insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plans, programs, agreements or arrangements,
and each other fringe or other employee benefit plan, program, agreement or arrangement (including any “employee benefit
plan”, within the meaning of Section 3(3) of ERISA), sponsored, maintained or contributed to or required to be contributed
to by any Seller or by any ERISA Affiliate of any Seller for the benefit of any current or former employee, independent contractor
or director (and/or their dependents or beneficiaries) of any Seller, or with respect to which any Seller or any ERISA Affiliate
of any Seller otherwise has any liabilities or obligations.

 

“Employees”
means all individuals, as of any date specified herein, whether or not actively at work as of such date, who are or were employed
by Sellers in the conduct of the Business, together with individuals who are hired in respect of the conduct of the Business after
the date hereof and prior to the Closing.

 

 

 

 

    	 	-2-	 

     

    

 

“Environmental
Law” means any federal, state or local statute, law, regulation, code, ordinance, or rule of common law currently in
effect relating to the protection of human health and safety or the environment or natural resources, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean
Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act
(15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the regulations promulgated pursuant thereto.

 

“ERISA”
means the Employee Retirement income Security Act of 1974, as amended.

 

“ERISA
Affiliate” means any entity that would be deemed to be a “single-employer” with any Seller under Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

 

“Escrow
Agent” shall have the meaning set forth in Section 2.2 of this Agreement.

 

“Excluded
Assets” shall have the meaning set forth in Section 1.2 of this Agreement.

 

“Excluded
Contracts” means every Contract that is not listed on Schedule 1.1(d) hereto.

 

“Excluded
Liabilities” shall have the meaning set forth in Section 1.4 of this Agreement.

 

“expenses”
means any and all costs and expenses, including attorneys’ and other professionals’ fees and disbursements sustained
or reasonably incurred incident to investigating, responding to or defending against any claim, investigation, action, suit or
proceeding relating to a matter subject to indemnification under this Agreement.

 

“Facilities”
means the healthcare facilities utilized in the Business and included among the Purchased Assets as further identified in Section
1.1 of this Agreement.

 

“Final
Order” means an order of the Bankruptcy Court that has not been reversed, modified or stayed, and as to which the time
for appeal has expired, and the deadline for filing any motion or petition for review, rehearing or certiorari has expired, and
as to which no appeal, motion or petition for review, rehearing or certiorari is pending.

 

“First
Deed of Trust” shall mean that certain Deed of Trust dated July 10, 2015, executed by Real Estate Seller in favor of
First National Bank of Oneida.

 

“Furniture
and Equipment” means all furniture, fixtures, furnishings, machinery, appliances and other equipment (including medical
equipment) and leasehold improvements owned by Sellers, used by Sellers in the conduct of the Business and located in the Ordinary
Course of Business at the Purchased Real Property, including all such desks, chairs, tables, Hardware, copiers, telephone lines,
telecopy machines and other telecommunication equipment (and, to the extent assignable by Sellers, the telephone numbers associated
therewith used in the Ordinary Course of Business), cubicles and miscellaneous office furnishings.

 

 

 

    	 	-3-	 

     

    

 

“Governmental
Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign,
federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

 

“Hardware”
means any and all computer and computer-related hardware, including computers, file servers, facsimile servers, scanners, color
printers, laser printers and networks.

 

“Hazardous
Material” means any substance, material or waste which is regulated by any Government Body including petroleum and its
by-products, asbestos, biomedical waste, medical waste and any chemical, material or substance which is defined as a “hazardous
waste,” “hazardous substance,” “hazardous material,” “restricted hazardous waste,” “industrial
waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic
substance” under any provision of Environmental Law.

 

“Healthcare
Programs” means Medicare, Medicaid, CHAMPUS/TRICARE programs, any other federal health care program (as defined in 42
U.S.C. § 1320a-7b(f)) and any other healthcare programs administered or funded by a Governmental Body or contractor thereof.

 

“Healthcare
Program Laws” means the Laws governing the Healthcare Programs, including: 42 U.S.C. §§ 1320a-7, 1320a-7a,
1320a-7b and 1395nn; the False Claims Act (31 U.S.C. § 3729 et seq.); the False Statements Act (18 U.S.C. § 1001);
the Program Fraud Civil Penalties Act (31 U.S.C. § 3801 et seq.); 18 U.S.C. § 1347, 18 U.S.C. § 669, 18
U.S.C. § 1035, 18 U.S.C. § 1518; and the corresponding fraud and abuse, false claims and anti-self-referral Laws of
any other Governmental Body.

 

“HIPAA”
means the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), as amended by the Health Information
Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, and all
regulations, rules, interpretations and orders promulgated thereunder, including but not limited to the regulations set forth
at 45 CFR Part 160 and Part 164.

 

“Hospital”
shall have the meaning set forth in the Recitals of this Agreement.

 

“Hospital
Seller” shall have the meaning set forth in the Preamble of this Agreement.

 

“Indebtedness”
means, with respect to any Person, (i) indebtedness of such Person for borrowed money, whether secured or unsecured, (ii) obligations
of such Person evidenced by notes, bonds, debentures or other similar instruments, (iii) obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such Person, (iv) capital lease obligations of such
Person, (v) obligations of such Person under acceptance, letter of credit or similar facilities, (vi) obligations of such Person
under interest rate cap, swap, collar or similar transaction or currency hedging transactions, and (vii) guarantees of such Person
of any such indebtedness referred to in clauses (i)-(vi) of any other Person.

 

“Intellectual
Property” means all Intellectual Property Rights owned by Sellers and/or used by Sellers in connection with the Business,
including any in the form of or arising from or in respect of Patents, Marks, Copyrights, Software or Technology.

 

“Intellectual
Property License” means any grant to Sellers of a right to use in connection with the Business any Intellectual Property
Rights owned by any other Person (other than Seller Marks), to the extent, and only to the extent, such right is transferable
by a Seller.

 

 

 

 

    	 	-4-	 

     

    

 

“Intellectual
Property Rights” means all patents, trademarks, service marks, trade names, trade secrets, domain names, computer software,
copyrights, inventions, processes, discoveries, formulae, research and development and applications and registrations for any
of the foregoing that Sellers own, license or otherwise possess the right to use.

 

“Inventory”
means all medical supplies, drugs, medications, food, janitorial, housekeeping and office supplies and other consumables located
in or used in connection with the operation of the Business.

 

“Knowledge”
(and any similar expression) means any matters known by, or which should be known following reasonable inquiry by those officers
of Purchaser or of those officers of a Seller or senior managers of the Business as of or prior to the Closing, as applicable,
each of which is identified on Schedule 11.1(a).

 

“Landing
Rights Agreements” means that certain Landing Rights Agreement for Use of Helipad, dated as of December 2, 2013, by
and between Pioneer Health Services of Oneida Real Estate, LLC, a Mississippi limited liability company, and Scott County, Tennessee,
a Tennessee governmental entity.

 

“Law”
means any domestic or foreign federal, state, provincial, local or municipal law, statute, code, ordinance, rule or principle
of common law, regulation, Order or directive.

 

“Legal
Proceeding” means any judicial, administrative or arbitral actions, suits, alternative dispute resolution, proceedings
(public or private) or claims or any proceedings by or before a Governmental Body or the Bankruptcy Case, including but not limited
to any audit hearing or investigation.

 

“Liability”
means any debt, liability or obligation (whether direct or indirect, known or unknown, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due), and including all fines, penalties, costs and expenses relating thereto.

 

“Lien”
means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, encroachment, claim, lease, charge, option, right
of first refusal, easement, servitude, proxy, voting trust or agreement, equitable interest, and transfer restriction under any
agreement, or restrictions of any kind or nature, known or unknown.

 

“Marks”
means all trademarks, service marks, trade names, service names, brand names, all trade dress rights, logos, Internet domain names
and corporate names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing,
and all applications, registrations and renewals thereof.

 

“Medicaid”
means any state program for medical assistance administered under Title XIX of the Social Security Act.

 

“Medical
Records” means those Patient Records constituting “Hospital Records” as defined at Tenn. Code Ann. §68-11-302
for patients who have received services from the Business at any time during the two (2) year period prior to the closure of the
Hospital on July _, 2016 and billing records related to such patients, whether in paper or electronic form.

 

“Medicare”
means the health insurance program administered under Title XVIII of the Social Security Act.

 

“Nonassignable
Asset” shall have the meaning set forth in Section 1.6(b) of this Agreement.

 

 

 

 

    	 	-5-	 

     

    

 

“Order”
means any order, injunction, judgment, decree, ruling, consent, approval, writ, assessment or arbitration award of a Governmental
Body.

 

“Ordinary
Course of Business” means the ordinary and usual course of normal day-to-day operations of the Business through the
date hereof consistent with past practice, subject to those actions necessary and incident to the Bankruptcy Code.

 

“Outside
Date” shall have the meaning set forth in Section 3.4(a)(ix) of this Agreement.

 

“Owned
Properties” means all real property and interest in real property owned in fee by a Seller and used in any material
degree in the Business.

 

“Patents”
means all patents and applications therefor, including continuations, divisionals, continuations-in-part, or reissues of patent
applications and patents issuing thereon.

 

“Patient
Records” shall mean any documents containing information concerning medical, health care or behavioral health services
provided to, or the medical, health care or behavioral health of any individual, or that are otherwise subject to regulation under
applicable Law, including HIPAA.

 

“Permits”
means any approvals, authorizations, consents, licenses, permits, certificates of need, certificates of exemption, franchises,
accreditations, registrations or certificates of a Governmental Body or other regulatory entity.

 

“Permitted
Exceptions” means (i) all defects, exceptions, restrictions, easements, encroachments, covenants, reservations, declarations,
state of facts, rights of way and encumbrances disclosed in policies of title insurance, surveys and other documentation related
to such policies and surveys set forth on Schedule 11.1(b) or set forth in the title commitment referenced in Section
8.1(e); (ii) statutory liens for current Taxes, assessments or other governmental charges not yet due and payable or the amount
or validity of which is being contested in good faith by appropriate proceedings, provided the same could not reasonably be expected
to result in a loss of the property and an appropriate reserve is established therefore; (iii) mechanics’, carriers’,
workers’, repairers’, and similar Liens arising or incurred in the Ordinary Course of Business for sums not yet due
and payable; (iv) zoning, entitlement and other land use and environmental regulations or designations by any Governmental Body
provided that such regulations or designations have not been violated; (v) title of a lessor under a capital or operating lease;
(vi) the First Deed of Trust and (vii) Liens set forth on Schedule 4.4.

 

“Person”
means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, association, estate, Governmental Body or other entity.

 

“Personal
Property Leases” means all tangible personal property and interests in tangible personal property leased, licensed or
otherwise possessed by a Seller and used in any material degree in the Business, as lessee, lessor, licensee, licensor or otherwise.

 

“Plan”
means any material “employee benefit plan” within the meaning of Section 3(3) of ERISA and any other material bonus,
profit sharing, pension, severance, deferred compensation, fringe benefit (as described in Code Section 132), insurance, welfare,
post-retirement, health, life, tuition refund, service award, company car, scholarship, relocation, disability, accident, sick,
vacation, holiday, unemployment, incentive, commission, retention, change in control, non-competition, and other plans, agreements,
policies trust funds (a) established, maintained, sponsored or contributed to (or with respect to which any obligation to contribute
has been undertaken) by a Seller or any ERISA Affiliate or (b) with respect to which a Seller or any ERISA Affiliate has or has
had any obligation, in each case, under which any Transferred Employee may receive benefits or may otherwise be subject.

 

 

 

 

 

    	 	-6-	 

     

    

 

“Purchase
Price” shall have the meaning set forth in Section 2.1 of this Agreement.

 

“Purchased
Assets” shall have the meaning set forth in Section 1.1 of this Agreement.

 

“Purchased
Personal Property” shall have the meaning set forth in Section 1.1(b) of this Agreement.

 

“Purchased
Real Property” shall have the meaning set forth in Section 1.1(a) of this Agreement.

 

“Purchaser”
shall have the meaning set forth in the Preamble of this Agreement.

 

“Purchaser
Documents” shall have the meaning set forth in Section 5.2 of this Agreement.

 

“Real
Estate” shall have the meaning set forth in the Recitals of this Agreement.

 

“Real
Estate Seller” shall have the meaning set forth in the Preamble of this Agreement.

 

“Real
Property Leases” means all real property and interests in real property leased, licensed or otherwise possessed by a
Seller and used in any material degree in the Business, as lessee, lessor, licensee, licensor or otherwise.

 

“Release”
means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching of Hazardous
Material into the indoor or outdoor environment, or into or out of any property.

 

“Remedial
Action” means any and all actions as required by a Governmental Body to (i) investigate, monitor, clean up, remove,
remediate, treat or in any other way address any Hazardous Material; (ii) prevent any Release so it does not endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment or any natural resources; (iii) perform pre-remedial
studies and investigations or post-remedial monitoring and care concerning Hazardous Material; or (iv) to correct a condition
of noncompliance with, or in violation of, Environmental Law.

 

“Rennova”
shall have the meaning set forth in the Preamble of this Agreement.

 

“Representatives”
means with respect to any Person, any of its Affiliates, directors, trustees, officers, members, employees, consultants, agents,
advisors and other representatives.

 

“Restricted
Area” shall have the meaning set forth in Section 7.17(a) of this Agreement.

 

“Revised
Statements” shall have the meaning set forth in Section 9.3 of this Agreement.

 

“Sale
Motion” means the motion, supporting papers, notices and form of Sale Order, all in form and substance reasonably acceptable
to Purchaser in its reasonable discretion, seeking approval and entry of the Sale Order.

 

“Sale
Order” means a Final Order of the Bankruptcy Court substantially in the form of Exhibit F hereto inter alia
approving the sale of the Purchased Assets, assumption of the Assumed Liabilities, and assignment of all Assigned Contracts
free and clear of any Liens (except for Permitted Exceptions and any Assumed Liabilities under this Agreement) and finding that
Purchaser is a “good faith purchaser” for purposes of Section 363(m) of the Bankruptcy Code, with the final form and
substance of such Order to be acceptable to Purchaser in its sole discretion.

 

 

 

    	 	-7-	 

     

    

 

“Seller”
and “Sellers” shall have the meanings set forth in the Preamble of this Agreement.

 

“Seller
Confidential Information” shall mean any information that is confidential or proprietary in nature that is related to
the Purchased Assets, the Assumed Liabilities, the Business, the Excluded Assets, or the Excluded Liabilities, including methods
of operation, patient information, prices, fees, costs, Technology, Software, know-how, marketing methods, plans, personnel, suppliers,
competitors, markets or other specialized information or proprietary matters; provided, however, that Seller Confidential
Information does not include, and there shall be no obligation hereunder with respect to, information that (i) becomes generally
available to the public other than as a result of a disclosure by Purchaser or any of its Representatives in violation of this
Agreement; (ii) becomes available to Purchaser on a non- confidential basis from a source other than a Seller or its Representatives,
provided that such source is not known by Purchaser to be bound by a confidentiality agreement with, or other obligation of secrecy
to, Sellers; (iii) is lawfully received by Purchaser from a third party reasonably believed by Purchaser to have the right to
disseminate Seller Confidential Information without restriction on disclosure; or (iv) can be shown by Purchaser through written
documents or evidence maintained by Purchaser to have been independently developed by either of them.

 

“Software”
means, except to the extent generally available for purchase from a third Person, any and all (i) computer programs, including
any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions,
flow charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces,
report formats, firmware, development tools, templates; menus, buttons and icons, and (iv) all documentation including user manuals
and other training documentation related to any of the foregoing, in each case, that are used in, incorporated in, embodied in,
displayed by or relate to, or are used or useful in the Business.

 

“Tax
Authority” means any federal, state or local government, or agency, instrumentality or employee thereof, charged with
the administration of any law or regulation relating to Taxes.

 

“Tax
Return” means all returns, declarations, reports, estimates, information returns and statements required to be filed
in respect of any Taxes.

 

“Taxes”
means (i) all federal, state, local or foreign taxes, charges or other assessments, including all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation, property, excise taxes under Section 4358 of
the Code, unrelated business income taxes, and estimated taxes, whether disputed or not, and (ii) all interest, penalties, tines,
additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).

 

“Technology”
means, collectively, all designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable
and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials,
and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing,
in any form whether or not specifically listed herein, and all related technology, that are used in, incorporated in, embodied
in, displayed by or relate to, or are used or useful in the Business, other than any in the form of Software.

 

 

 

 

    	 	-8-	 

     

    

 

“Title
Company” means Fidelity National Title Group, Inc. or other nationally recognized title insurance company reasonably
acceptable to Purchaser.

 

“Transfer
Taxes” shall have the meaning set forth in Section 9.1 of this Agreement.

 

“Transferred
Property” shall have the meaning set forth in Section 1.2(l) of this Agreement.

 

“Waller
Professional Fees Escrow” shall have the meaning set forth in Section 6.6 of this Agreement.

 

“WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	-9-	 

     

    

 

 

AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT

 

This Amendment No. 1 to Asset Purchase
Agreement (this "Amendment"), dated as of December 31, 2016, is by and among Pioneer Health Services of Oneida
LLC, a Mississippi limited liability company ("Hospital Seller"), Pioneer Health Services of Oneida Real Estate
LLC, a Mississippi limited liability company ("Real Estate Seller", each individually a "Seller"
and, collectively with Hospital Seller, the "Sellers"), and Rennova Health, Inc., a Delaware corporation ("Rennova"
or "Purchaser").

 

RECITALS

 

A. On October 26, 2016, Sellers and Purchaser entered
into that certain Asset Purchase Agreement ("Purchase Agreement"), pursuant to which Purchaser agreed to purchase
the Purchased Assets from, and assume the Assumed Liabilities of, Sellers.

 

B. Pursuant to Section 10.5 of the
Purchase Agreement, any term of the Purchase Agreement may be amended by an agreement in writing signed by each party thereto.

 

C. The parties to the Purchase Agreement
desire to amend the Purchase Agreement as set forth below.

 

NOW, THEREFORE, in consideration
of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the paities hereby agree as follows:

 

1.       Definitions;
Construction. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. References
in the Purchase Agreement to "this Agreement" (and indirect references such as "hereunder," "hereby,"
"herein" and "hereof') shall be deemed to be references to the Purchase Agreement as amended hereby.

 

2.       Amendment
to Section 3.4(a)(ix). Section 3.4(a)(ix) of the Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

"(ix) upon written notice to Sellers if the Closing shall
not have occurred by the close of business on January 6, 2017 (the "Outside Date")."

 

3.       Miscellaneous.
Except as expressly modified by this Amendment, all of the terms and conditions of the Purchase Agreement shall remain in
full force and effect. In the event of any conflict or inconsistency between the terms and conditions of the Purchase
Agreement and this Amendment, the terms and conditions of this Amendment shall control and govern. This Amendment may be
executed in multiple counterparts which, when taken together, shall constitute one and the same document. The exchange of
copies of this Amendment and of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute
effective execution and delivery of this Amendment as to the parties and may be used in lieu of the original agreement for
all purposes. Signatures of the parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed
to be their original signatures for any purpose whatsoever.

 

[Remainder of page intentionally left blank]

 

 

    	 	1	 

     

    

 

IN WITNESS WHEREOF, the parties have executed this Amendment
effective as of the date first above written.

 

 

	SELLERS:	 	PIONEER HEALTH SERVICES OF ONEIDA LLC
	 	 	 
	 	 	By: /s/ Scott Phillips                                               
	 	 	Name: Scott Phillips
	 	 	Title: CRO
	 	 	 
	 	 	 
	 	 	PIONEER HEALTH SERVICES OF ONEIDA REAL ESTATE LLC
	 	 	 
	 	 	By: /s/ Joseph S. McNulty III                           
	 	 	Name: Joseph S. McNulty III
	 	 	Title: President
	 	 	 
	 	 	 
	PURCHASER:	 	RENNOVA HEALTH, INC.
	 	 	 
	 	 	By: /s/ Victoria E. Nemerson                              
	 	 	Name: Victoria E. Nemerson
	 	 	Title: General Counsel

 

 

 

 

 

 

 

 

 

[Signature Page to First Amendment to
Asset Purchase Agreement]

 

 

 

 

    	 	2	 

     

    

 

 

AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT

 

This Amendment No. 2
to Asset Purchase Agreement (this “Amendment”), dated as of January 6, 2017, is by and among Pioneer Health
Services of Oneida LLC, a Mississippi limited liability company (“Hospital Seller”), Pioneer Health Services
of Oneida Real Estate LLC, a Mississippi limited liability company (“Real Estate Seller”, each individually
a “Seller” and, collectively with Hospital Seller, the “Sellers”), and Rennova Health, Inc.,
a Delaware corporation (“Rennova” or “Purchaser”).

RECITALS

 

A.       On
October 26, 2016, Sellers and Purchaser entered into that certain Asset Purchase Agreement, as amended by that Amendment No. 1
to Asset Purchase Agreement, dated December 8, 2016 (as amended, the “Purchase Agreement”), pursuant to which
Purchaser agreed to purchase the Purchased Assets from, and assume the Assumed Liabilities of, Sellers.

 

B.       Pursuant
to Section 10.5 of the Purchase Agreement, any term of the Purchase Agreement may be amended by an agreement in writing signed
by each party thereto.

 

C.       The
parties to the Purchase Agreement desire to further amend the Purchase Agreement as set forth below.

 

NOW, THEREFORE,
in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

 

1.       Definitions;
Construction. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement. References
in the Purchase Agreement to “this Agreement” (and indirect references such as “hereunder,” “hereby,”
“herein” and “hereof”) shall be deemed to be references to the Purchase Agreement as amended hereby.

 

2.       Amendment
to Section 3.4(a)(ix). Section 3.4(a)(ix) of the Purchase Agreement is hereby amended and restated in its entirety as follows:

“(ix) upon written notice to Sellers
if the Closing shall not have occurred by the close of business on January 13, 2017 (the “Outside Date”).”

 

3.       Miscellaneous.
Except as expressly modified by this Amendment, all of the terms and conditions of the Purchase Agreement shall remain in full
force and effect. In the event of any conflict or inconsistency between the terms and conditions of the Purchase Agreement and
this Amendment, the terms and conditions of this Amendment shall control and govern. This Amendment may be executed in multiple
counterparts which, when taken together, shall constitute one and the same document. The exchange of copies of this Amendment and
of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute effective execution and delivery of
this Amendment as to the parties and may be used in lieu of the original agreement for all purposes. Signatures of the parties
transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be their original signatures for any purpose
whatsoever.

 

[Remainder of page intentionally left blank]

 

 

    	 	1	 

     

    

 

IN WITNESS WHEREOF, the parties have executed this Amendment
effective as of the date first above written.

 

 

	SELLERS:	 	PIONEER HEALTH SERVICES OF ONEIDA LLC
	 	 	 
	 	 	By: /s/ Scott Phillips                                               
	 	 	Name: Scott Phillips
	 	 	Title: CRO
	 	 	 
	 	 	 
	 	 	PIONEER HEALTH SERVICES OF ONEIDA REAL ESTATE LLC
	 	 	 
	 	 	By: /s/ Scott Phillips                           
	 	 	Name: Scott Phillips
	 	 	Title: President
	 	 	 
	 	 	 
	PURCHASER:	 	RENNOVA HEALTH, INC.
	 	 	 
	 	 	By: /s/ Michael Goldberg                              
	 	 	Name: Michael Goldberg
	 	 	Title: Director

 

 

 

 

 

 

 

 

 

[Signature Page to Second Amendment to
Asset Purchase Agreement]

 

 

    	 	2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00266-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00266-of-00352.parquet"}]]