Document:

Exhibit
10.1

Execution
Copy

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

INFOLOGIX, INC.

DDMS HOLDINGS, LLC

INFOLOGIX-DDMS, INC.

LOUIS HEIDELBERGER

and

MARK NIEMIEC

 

Dated as of April 9, 2007

 

  
  
  

Execution Copy

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”)
is made and entered into this 9th day of April, 2007 by and among INFOLOGIX,
INC., a Delaware corporation (“InfoLogix”), INFOLOGIX-DDMS, INC. (“Merger
Sub”), a Delaware corporation and a wholly-owned subsidiary of InfoLogix,
DDMS HOLDINGS, LLC, a Florida limited liability company (“DDMS”), and
Louis Heidelberger and Mark Niemiec, individuals residing in the Commonwealth
of Pennsylvania and Florida, respectively, and owners of all of the outstanding
equity interests of DDMS (the “Shareholders”).

WHEREAS, DDMS owns certain
patents, patent applications, and other intellectual property and is in the
business of the development of such intellectual property (the “Business”) set
forth on Schedule 4.9(a) hereto.

WHEREAS, the parties hereto
desire to provide for the merger of DDMS with and into Merger Sub pursuant to
Section 368(a)(2)(D) of the Code, and for certain other matters, all on the
terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:

ARTICLE I.  DEFINITIONS AND
CONSTRUCTION

1.1           Definitions.

“Affiliate” shall mean, as to any Person, any other
Person controlled by, under the control of, or under common control with, such
Person.  As used in this definition, “control”
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).

“Books and Records” shall mean (i) the minute books
containing the minutes of all meetings and written consents of the shareholders
and managers of DDMS and (ii) all books and records of DDMS prior to the
Closing Date, including customer lists, reports, plans, projections and
advertising and marketing materials and financial and accounting books and
records.

“Business” shall mean the business conducted by DDMS
as set forth in the Recitals hereto.

“Business Day” shall mean any day other than a
Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania.

“Closing Date” shall mean the date on which the
Closing is completed.

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

“DDMS Shares” shall mean the shares associated with
equitable ownership rights in and to DDMS.

“DGCL” shall mean the General Corporation Law of the
State of Delaware, 8 Del. C. § 398, as amended.

“Encumbrance” shall mean a mortgage, charge, pledge,
lien, option, restriction, claim, right of first refusal, right of preemption,
third party right or interest or other encumbrance or security interest of any
kind or similar right or any other matter affecting title.

 

“InfoLogix Stock” shall mean the common stock of
InfoLogix, $0.00001 par value per share.

“Intellectual Property” shall mean all Patents, trademarks, service marks, trade names,
copyrights (including any applications for any of the foregoing), domain names,
all other names embodying business or product goodwill (or both), inventions,
discoveries and improvements, processes, know-how, trade secrets, scientific,
technical, engineering and marketing data, schematics, designs, blue-prints,
computer programs, software, including all object and source codes, programming
tools and all other techniques used or necessary for DDMS.

“Intellectual Property Rights”  shall mean, (a) inventions, invention
disclosures, and discoveries described in any of the Intellectual Property (b)
rights to apply in any or all countries of the world for patents, certificates
of invention, utility models, industrial design protections, design patent protections,
or other governmental grants or issuances of any type related to any of the
Intellectual Property and the inventions, invention disclosures, and
discoveries therein; (c) causes of action (whether known or unknown or whether
currently pending, filed, or otherwise) and other enforcement rights under, or
on account of, any of the Patents without limitation, all causes of action and
other enforcement rights for (i) damages, (ii) injunctive relief, and (iii) any
other remedies of any kind for past, current and future infringement; and (d)
rights to collect royalties or other payments under or on account of any of the
Intellectual Property and/or any of the foregoing.

“LLC Act” shall mean the Florida Limited Liability
Company Act, Fla. Stat. § 608.401, as amended.

“Merger” shall mean the merger of DDMS with and into
Merger Sub as contemplated by this Agreement.

“Patents” shall mean, excluding the Abandoned Assets
(“Abandoned Assets” means those specific provisional patent applications,
patent applications, patents and other governmental grants or issuances listed
on Schedule 4.9(j)), all (a) Live Assets (“Live Assets” means the
provisional patent applications, patent applications, and patents listed on Schedule
4.9(a)); (b) patents or patent applications (i) to which any of the Live
Assets directly or indirectly claims priority, (ii) for which any of the Live
Assets directly or indirectly forms a basis for priority, and/or (iii) that
were co-owned applications that directly or indirectly incorporate by reference
the Live Assets; (c) reissues, reexaminations, extensions, continuations,
continuations in part, continuing prosecution applications, requests for
continuing examinations, divisions, and registrations of any item in any of the
foregoing categories (a) and (b); (d) foreign patents, patent applications and
counterparts relating to any item in any of the foregoing categories (a)
through (c), including, without limitation, certificates of invention, utility
models, industrial design protection, design patent protection, and other
governmental grants or issuances; and (e) any items in any of the foregoing
categories (b) through (d) whether or not expressly listed as Live Assets and
whether or not claims in any of the foregoing have been rejected, withdrawn,
cancelled, or the like.

“Person” shall mean an individual, company,
partnership, limited liability company, limited liability partnership, joint
venture, trust or unincorporated organization, joint stock corporation or other
similar organization, government or any political subdivision thereof, or any
other legal entity.

“Pro Rata Percentage” shall mean with respect to
each Shareholder, the percentage equal to the number of DDMS Shares held by
such Shareholder immediately before the Effective Time divided by the total
number of DDMS Shares issued and outstanding immediately before the Effective
Time.

“Related Agreements” shall mean all instruments,
agreements and other documents executed and delivered or to be executed and
delivered pursuant to this Agreement.

“Schedules” shall mean the disclosure schedules
delivered by DDMS to Merger Sub pursuant to this Agreement.

“Taxes” shall mean all taxes, assessments, charges,
duties, fees, levies or other governmental charges, including but not limited
to, all federal, state, local, foreign, or other income, profits, unitary,
business, franchise, capital stock, real property, personal property,
intangible taxes, withholding, FICA, Medicare, unemployment compensation,
disability, transfer, sales, use, excise and other taxes, assessments, charges,
duties, fees, or levies of

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any kind
whatsoever (whether or not requiring the filing of Tax Returns) and all
deficiency assessments, additions to tax, penalties and interest.

“Tax Return” shall mean any return, amended return or
other report (including but not limited to elections, declarations,
disclosures, schedules, estimates and information returns) required to be filed
with respect to or in connection with the calculation, determination,
assessment, or collection of any Taxes.

1.2           Construction.

(a)           The headings and captions used herein are intended
for convenience of reference only, and shall not modify or affect in any manner
the meaning or interpretation of any of the provisions of this Agreement.

(b)           As used herein, the singular shall include the
plural, the masculine and feminine genders shall include the neuter, and the
neuter gender shall include the masculine and feminine, unless the context
otherwise requires.

(c)           The words “hereof”, “herein”, and “hereunder”, and
words of similar import, when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.

(d)           All references herein to Sections, Schedules or
Exhibits shall be deemed to refer to Sections of and Schedules or Exhibits to
this Agreement, unless specified to the contrary.

(e)           The words “include,” “includes” and “including” when
used herein shall be deemed in each case to be followed by the words “without
limitation.”

(f)            “To the knowledge of DDMS,” “to the best knowledge,
information or belief of DDMS,” or any similar phrase shall be deemed to mean
that (i) a DDMS Responsible Person (as defined below) is actually aware of a
particular fact or matter or (ii) a prudent individual in such DDMS Responsible
Person’s capacity could reasonably be expected to discover or otherwise become
aware of that fact or matter in the ordinary course of performing his functions
on behalf of DDMS or in the ordinary course of conducting a reasonable
investigation regarding the accuracy of any representation or warranty
contained in this Agreement.  For
purposes of this definition, the term “DDMS Responsible Person” means
Louis Heidelberger or Mark Niemiec.

(g)           “Material adverse effect” means, with respect to a
specified party, any change or effect, as the case may be, that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on the assets, business, operations or condition (financial or
otherwise) of such party and its subsidiaries taken as a whole.

(h)           As all parties participated in negotiating and
drafting this Agreement, no rule of construction shall apply to this Agreement
which construes ambiguous language in favor of or against any party by reason
of that party’s role in drafting this Agreement.

ARTICLE II.  THE MERGER

2.1           The
Merger.  Upon the terms and subject
to the conditions set forth in this Agreement and in accordance with the DGCL
and the LLC Act, at the Effective Time (as defined herein), DDMS shall be
merged with and into Merger Sub in exchange for the Merger Consideration (as
defined herein).  At the Effective Time,
the separate corporate existence of DDMS shall cease, and Merger Sub shall
continue its corporate existence under the laws of the State of Delaware as the
surviving corporation.  (Merger Sub,
after giving effect to the Merger, is sometimes referred to herein as the “Surviving
Corporation”).

2.2           Closing.  Subject to the
terms and conditions hereof, the closing of the transactions contemplated by
this Agreement (the “Closing”) will take place on the date hereof (the “Closing
Date”).  The Closing shall be held at
the offices of Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets,
Philadelphia, PA 19103-6996, fax:  (215)
988-2757, or at such other place as the parties hereto may agree.

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2.3           Effective Time of the
Merger.  The Merger shall, subject to
the DGCL, become effective as of such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware or at such time
thereafter as is provided in the Certificate of Merger (the “Effective Time”).

2.4           Effects of the Merger.  From and after the Effective Time, the Merger
shall have the effects set forth in the applicable sections of the DGCL.  Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all property, rights,
privileges, powers and franchises of Merger Sub and DDMS shall vest in the
Surviving Corporation, and all debts, liabilities, obligations and duties of
Merger Sub and DDMS shall become the debts, liabilities, obligations and duties
of the Surviving Corporation.

2.5           Certificate of
Incorporation.  At the Effective
Time, the Certificate of Incorporation of Merger Sub as in effect immediately
before the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with its terms and applicable
Law.

2.6           Bylaws.  At the Effective Time, the Bylaws of Merger
Sub as in effect immediately before the Effective Time shall be the Bylaws of
the Surviving Corporation until amended in accordance with their terms, the
Certificate of Incorporation of the Surviving Corporation and applicable Law.

2.7           Directors
and Officers.  From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with the Bylaws of the Surviving Corporation and applicable Law, the
directors and officers of Merger Sub immediately before the Effective Time
shall comprise all of the directors and officers of the Surviving Corporation.

2.8           Deliveries at the Closing  At the Closing, in addition to the other
actions contemplated elsewhere herein:

(a)           Each Shareholder shall deliver, or
shall cause to be delivered, to Merger Sub the following:

(i)                                     certificates
representing all DDMS Shares held by such Shareholder, if any, duly endorsed
for transfer;

(ii)                                  a
certificate from such Shareholder substantially in the form set forth in
Treasury Regulation Section 1.1445-2(b);

(iii)                               a
consulting agreement between Merger Sub and LM Consulting LLC, a limited
liability company wholly-owned by the Shareholders, in the form attached hereto
as Exhibit A (the “Consulting Agreement”), executed by LM
Consulting LLC; and

(iv)                              such
other documents and instruments as Merger Sub may reasonably request to
effectuate or evidence the transactions contemplated by this Agreement,
including, without limitation, any documents necessary to transfer the
Intellectual Property to the Surviving Corporation.

(b)           DDMS shall deliver to Merger Sub the
following:

(i)                                     copies
of resolutions duly adopted by (A) the Shareholders and (B) the managers of
DDMS authorizing the execution, delivery, and performance of this Agreement and
all other documents and instruments to be delivered by DDMS pursuant to this
Agreement;

(ii)                                  the
limited liability company agreement of DDMS;

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(iii)                               a
certificate of the President of DDMS certifying the accuracy and completeness
of the resolutions and the limited liability company agreement delivered
pursuant to paragraphs (i) and (ii) above;

(iv)                              the
limited liability company member records and minute books of DDMS;

(v)                                 certificates
from the Secretary of State of Florida certifying (A) as to DDMS’ formation,
valid existence and good standing as a domestic limited liability company in
the State of Florida, together with a certificate of good standing from the
Secretary of State or other appropriate governmental official of each
jurisdiction in which DDMS is qualified to conduct its business as a foreign
entity, and (B) the certificate of formation of DDMS, all dated no more than
five days prior to the Closing Date; and

(vi)                              such
other documents and instruments as Merger Sub may reasonably request to
effectuate or evidence the transactions contemplated by this Agreement,
including, without limitation, any documents necessary to transfer the
Intellectual Property to the Surviving Corporation.

(c)           InfoLogix and Merger Sub shall
deliver, or shall cause to be delivered, to DDMS the following:

(i)                                     the
Initial Cash Payment (as defined herein);

(ii)                                  the
Consulting Agreement executed by Merger Sub; and

(iii)                               such
other documents and instruments as DDMS may reasonably request to effectuate or
evidence the transactions contemplated by this Agreement.

ARTICLE III.  MERGER
CONSIDERATION

3.1           Effect
on Merger Sub Capital Stock.  As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of capital stock of Merger Sub, each issued and
outstanding share of capital stock of Merger Sub shall remain outstanding and
represent a validly issued, fully paid and nonassessable share of common stock
of the Surviving Corporation.

3.2           Merger Consideration. 
The merger consideration for the DDMS Shares shall be payable to the
Shareholders as follows (collectively, the “Merger Consideration”):

(a)           cash equal to $200,000, all of which shall be payable
to the Shareholders at the Closing in accordance with Section 3.3(a)
(the “Initial Cash Payment”); and

(b)           400,000 shares of InfoLogix Stock issuable to the
Shareholders in accordance with Section 3.3(b) (the “Initial Stock
Payment”).

3.3           Payment of Merger Consideration.

(a)           Initial Cash Payment.  At the
Closing, upon surrender to Merger Sub of certificates, if any, representing all
and not less than all of the DDMS Shares, Merger Sub shall pay to each
Shareholder an amount of cash equal to such Shareholder’s Pro Rata Percentage
of the Initial Cash Payment.  The Initial
Cash Payment will be payable by means of wire transfer to accounts specified in
writing to Merger Sub by Shareholders’ Representative not less than five
Business Days before the Closing Date.

 

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(b)           Initial Stock Payment.  Within 30
days after the Closing Date, InfoLogix shall issue and deliver to each
Shareholder a stock certificate representing a number of unregistered shares of
InfoLogix Stock equal to such Shareholder’s Pro Rata Percentage of the Initial
Stock Payment.

(c)           Taxes.  All Taxes incurred in connection with this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby shall be paid by Merger Sub, excluding any Taxes incurred by the
Shareholders.  The Shareholders shall
prepare or cause to be prepared, at the expense of the Shareholders, and file
or cause to be filed, and pay or cause to be paid, all Tax Returns for DDMS for
all periods prior to the Closing Date which are filed after the Closing Date.  Merger Sub and InfoLogix agree to provide all
information reasonably requested by the Shareholders to prepare, or cause to be
prepared, such Tax Returns.  The
Shareholders shall permit Merger Sub to review and comment on each such Tax
Return described in the preceding sentence. 
All Tax sharing agreements or similar agreements (other than DDMS’ then
current limited liability company agreement or other operating agreement, if
any) with respect to or involving DDMS shall be terminated as of the Closing
Date and, after the Closing Date, DDMS shall not be bound thereby or have any
liability thereunder.

ARTICLE IV.  REPRESENTATIONS AND
WARRANTIES REGARDING DDMS

As a material inducement for InfoLogix
and Merger Sub to enter into this Agreement and to consummate the transactions
contemplated hereby, DDMS and the Shareholders hereby jointly and severally
make the following representations and warranties as of the date hereof, each
of which is relied upon by InfoLogix and Merger Sub regardless of any
investigation made or information obtained by or on behalf of InfoLogix or
Merger Sub.

4.1           Organization; Qualification; Corporate Records.

(a)           DDMS
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Florida and has the power to own all of
its property and assets, to incur all of its liabilities and to carry on its
Business as now being conducted.

(b)           DDMS
is duly qualified to do business and in good standing in each jurisdiction in
which the nature or conduct of the Business or the character or location of its
properties makes such qualification necessary, except where any such failure
would not have a material adverse effect on DDMS.  Schedule 4.1(b) lists each
jurisdiction in which DDMS is qualified to do business.

(c)           The names of the managers and officers of DDMS,
together with the offices they hold, are set forth on Schedule 4.1(c).  DDMS has delivered to InfoLogix true and
complete copies of (i) the certificate of formation of DDMS, together with all
amendments thereto and (ii) the limited liability company agreement of DDMS,
together with all amendments thereto, as currently in effect.

(d)           DDMS
has not conducted business under any name other than its own.

(e)           DDMS
does not currently and has not in the past conducted any business or operations
of any type other than procuring, owning, and developing the Intellectual
Property.

(f)            DDMS has the power to execute, deliver and perform
this Agreement and the Related Agreements to which DDMS is a party, and has
taken all action required by its certificate of formation, limited liability
company agreement or otherwise, to authorize the execution, delivery and
performance of this Agreement and the Related Agreements.  The execution and delivery of this Agreement
has been approved by the managers and shareholders of DDMS.  This Agreement is a valid obligation of DDMS,
legally binding upon it and enforceable in accordance with its terms.

(g)           All books and financial records included in the Books
and Records of DDMS are complete and correct in all material respects and have
been maintained in accordance with good business practice.  True and complete copies of all minutes,
resolutions, DDMS Share certificates and transfer ledgers of DDMS are contained
in

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the minute books and transfer ledgers that have been delivered to Merger
Sub for inspection and will be delivered to Merger Sub at the Closing.

4.2           No Violations of Laws or Agreements, Consents or Defaults.

(a)           The execution and delivery of this Agreement by DDMS
and the consummation by DDMS of the transactions contemplated by this Agreement
and the Related Agreements will not result in any breach or violation of any of
the terms or provisions of, or constitute a default under, (i) the certificate
of formation and limited liability company agreement of DDMS or (ii) any
statute, order, decree, proceeding, rule, or regulation of any court or
governmental agency or body, United States or foreign, having jurisdiction over
DDMS or any assets of DDMS.

(b)           The delivery by DDMS of this Agreement, the Related
Agreements and the consummation by DDMS of the transactions contemplated hereby
and thereby, including, without limitation, any transfer of Intellectual
Property to the Surviving Corporation, will not result in a breach or violation
of the term of, or constitute a default under, or require notice to any third
party under, any agreement, instrument, or commitment to which DDMS is party,
by which DDMS is bound, or to which any of DDMS’s assets are subject, and no
consent or approval is required from any third party for the transactions
contemplated by this Agreement and the Related Agreements.

(c)           DDMS
is not in default under, or in violation of any provision of, its certificate
of formation, operating agreement, any promissory note, indenture or any
evidence of indebtedness or security thereto, lease, purchase contract or other
commitment, or any other agreement to which DDMS is a party.

4.3           Regulatory Matters.

(a)           DDMS is not the subject of any outstanding, nor, to
the knowledge of DDMS, any threatened, investigation, audit, review or other
examination of DDMS by any federal or state governmental agency (excluding the
Patent and Trademark Office) having supervisory or regulatory authority with
respect to DDMS or the Business, and (ii) DDMS is not subject to, nor has DDMS
received any notice or advice that it may become subject to, any order,
agreement, memorandum of understanding or other regulatory enforcement action
or proceeding with any federal or state governmental agency having supervisory
or regulatory authority with respect to DDMS or the Business.

(b)           To the knowledge of DDMS, there is no proposed or
pending change in any law or regulation that would have a material adverse
effect on DDMS.

4.4           Tax Matters.  All required federal, state
and local Tax Returns of DDMS have been accurately prepared in all material
respects and duly and timely filed, and all federal, state, and local Taxes
required to be paid with respect to the periods covered by such returns have
been paid to the extent that the same are material and have become due. DDMS is
not and has not been delinquent in the payment of any Tax.  DDMS has not had any Tax deficiency assessed
against it.  None of DDMS’s federal
income tax returns nor any state or local income or franchise tax returns have
been audited by governmental authorities. 
There are no federal, state, local, or foreign audits, actions, suits,
proceedings, investigations, claims or administrative proceedings relating to
Taxes or any Tax Returns of DDMS now pending, and DDMS has not received any
notice of any proposed audits, investigations, claims or administrative
proceedings relating to Taxes or any Tax Returns.

4.5           Litigation Claims.

(a)           There is
no legal action, suit, claim, investigation, arbitration, or other legal,
administrative, or other governmental proceeding (a “Claim”) pending or,
to the knowledge of DDMS, threatened against or affecting DDMS and/or its
Affiliates that relates to the properties, assets, or business of DDMS.  There is no outstanding or, to the knowledge
of DDMS, threatened judgment, injunction, order or consent, or similar decree
or agreement

 7
 

(including,
without limitation, any consent or similar decree or agreement with any
governmental entity) against, affecting, or naming DDMS.

(b)           To the knowledge of DDMS, no event has occurred and
no circumstance, matter or set of facts exist which would constitute a valid
basis for the assertion by any third party of any Claim.

4.6           Contracts; Leases and Other Agreements.  Except as set forth on Schedule 4.6,
DDMS is not a party to any agreements, loans, contracts, leases, guarantees,
letters of credit, lines of credit or commitments, whether written or oral
(individually, a “Contract” or collectively, “Contracts”).  DDMS has delivered to InfoLogix true and
complete copies of each Contract listed on Schedule 4.6.

4.7           No Liabilities.  DDMS has no liabilities or other obligations
other than those provided for in this Agreement.

4.8           Properties.  DDMS does not currently and
has not at any time in the past owned or leased any real or personal property.

4.9           Intellectual Property.

(a)           Schedule
4.9(a) contains an accurate and complete list of (i) all domestic and/or
foreign Patents, trademarks, trade names, service marks, assumed names and
copyrights, and all applications therefor, and, with respect to registered
items, contains a list of all jurisdictions in which such items are registered
and all registration numbers, (ii) all licenses, permits and other agreements
relating thereto, and (iii) all agreements relating to any of such Intellectual
Property that DDMS is licensed or authorized to use by others.

(b)           Title,
Contest, and Infringement.  DDMS owns
all right, title, and interest to the Intellectual Property Rights, including,
without limitation, all right, title, and interest to sue for infringement of
the Intellectual Property.  DDMS has
obtained and properly recorded previously executed assignments for the
Intellectual Property as necessary to fully perfect its rights and title
therein in accordance with governing law and regulations in each respective
jurisdiction.  The Intellectual Property
Rights are free and clear of all liens, claims, mortgages, security interests
or other Encumbrances and restrictions. 
There are no actions, suits, investigations, claims, or proceedings
threatened (to the knowledge of DDMS), pending, or in progress relating in any
way to the Intellectual Property Rights. 
There are no existing contracts, agreements, options, commitments, proposals,
bids, offers, or rights with, to, or in any person to acquire any of the
Intellectual Property Rights.  Except as
set forth on Schedule 4.9(b), no claims have been asserted by any party
challenging or questioning the ownership, validity, enforceability or use by
DDMS of any of the Intellectual Property and, to the knowledge of DDMS, there
is no valid basis for any such claim, and, to the knowledge of DDMS, the use or
other exploitation of the Intellectual Property by DDMS does not infringe on or
dilute the rights of any Person; and, to the best knowledge, information and
belief of DDMS, DDMS has provided InfoLogix with all information regarding any
Person who is or is potentially infringing on the rights of DDMS with respect
to any of the Intellectual Property.

(c)           Existing
Licenses.  No licenses under the
Patents have been granted or retained by DDMS, any prior owners, or
inventors.  As of the Closing, none of
DDMS, any prior owner, or any inventor will retain any rights or interest in
the Intellectual Property Rights other than as a stockholder of InfoLogix.

(d)           Restrictions
on Rights. DDMS is not subject to any covenant not to sue, non-competition
provision or similar restrictions on the enforcement, enjoyment or use of the
Intellectual Property Rights or the Abandoned Assets as a result of any prior
transaction related to the Intellectual Property Rights or the Abandoned
Assets.

(e)           Validity
and Enforceability.  Except as set
forth in Schedule 4.9(e), none of the Intellectual Property or the Abandoned
Assets has ever been found invalid, unpatentable, or unenforceable for any
reason in any administrative, arbitration, judicial or other proceeding, and
DDMS does not know of and has not received any notice or information of any
kind from any source suggesting that the Intellectual Property may be invalid,

 8
 

unpatentable, or unenforceable.  To
the extent “small entity” fees were paid to the United States Patent and
Trademark Office (or other domestic or foreign patent agency) for any
Intellectual Property, such reduced fees were then appropriate because the
payor qualified to pay “small entity” fees at the time of such payment and
specifically had not licensed rights in the any Patent to an entity that was
not a “small entity.”

(f)            Conduct.  None of DDMS or, to the knowledge of DDMS,
the agents or representatives of DDMS have engaged in any conduct, or omitted
to perform any necessary act, the result of which would invalidate any of the
Intellectual Property or hinder their enforcement, including, without
limitation, misrepresenting DDMS’ Intellectual Property Rights to a
standards-setting organization.  There is
no obligation imposed by a standards-setting organization on InfoLogix to
license any of the Intellectual Property on particular terms or conditions.

(g)           Enforcement.  DDMS has not put a third party on notice of
actual or potential infringement of any of the Intellectual Property or the
Abandoned Assets.  DDMS has not entered
into any license under any of the Intellectual Property or the Abandoned Assets.  DDMS has not initiated any enforcement action
with respect to any of the Intellectual Property or the Abandoned Assets.

(h)           Government
Agency Proceedings.  None of the
Intellectual Property or the Abandoned Assets has been or is currently involved
in any opposition, reexamination, reissue, interference proceeding, or any
similar proceeding, and no such proceedings are pending or, to the knowledge of
DDMS, threatened.

(i)            Fees.  All maintenance fees, annuities, and the like
due or payable on the Intellectual Property have been timely paid.  For the avoidance of doubt, such timely
payment includes payment of any maintenance fees for which the fee is payable
(e.g., the fee payment window opens) even if the surcharge date or final
deadline for payment of such fee would be in the future.

(j)            Abandoned
Assets.  Schedule 4.9(j)
contains a complete and correct list of all Abandoned Assets.  Each of the Abandoned Assets has expired,
lapsed, or been abandoned or deemed withdrawn.

(k)           DDMS
has taken all reasonable security measures to protect the secrecy,
confidentiality and value of the Intellectual Property of DDMS.  No Person has any marketing rights to or
other economic rights in the Intellectual Property of DDMS.

(l)            DDMS has delivered to Merger Sub all documents in
DDMS’ custody, possession or control with respect to any invention, discovery,
process, design, computer program or other know-how or trade secret included in
the Intellectual Property, including all workpapers, plans and other documents
supporting the conception or reduction to practice of each Patent, which
documents shall be accurate in all material respects and reasonably sufficient
in detail and content to identify and explain such invention, discovery,
process, design, computer program or other know-how or trade secret and to
facilitate its full and proper use.

(m)          The Shareholders, directors, employees and, to the
extent such contractors are or have been 
involved with the development, implementation, use or marketing of any
Intellectual Property, contractors of DDMS have entered into written agreements
(“IP Assignment Agreements”) assigning to DDMS all rights to inventions,
improvements and continuations relating thereto, and copies of all such
agreements have been provided to Merger Sub.

4.10         Compliance With Laws.  The operations and activities of DDMS has
previously and continues to comply in all material respects with all applicable
federal, state, foreign and local laws, statutes, codes, ordinances, rules,
regulations, permits, judgments, orders, writs, awards, decrees or injunctions
(collectively, the “Laws”) as in effect on or before the date of this
Agreement.  DDMS has received no notice
or communication from any Person asserting a failure to comply with any Laws,
nor has DDMS received any notice that any authority or third party intends to
seek enforcement against DDMS to compel compliance with any such Laws.

4.11         Vote Required.  The affirmative vote of the holders of 80% of
the outstanding DDMS Shares is the only vote of the holders of any class or
series of DDMS equity interests necessary to approve this Agreement

 9
 

and the transactions contemplated hereby, which affirmative vote has been
obtained and not rescinded or overturned as of the date hereof.

4.12         Brokers.  No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right to, interest in or
claim upon Merger Sub, DDMS, or the Surviving Corporation for any commission,
fee or other compensation as a finder or broker because or any act or omission
by DDMS.

4.13         Disclosure.  No representation or warranty by DDMS
contained in this Agreement, and no representation or warranty contained in any
document, list (including, without limitation, the Schedules), certificate or
other communication furnished or to be furnished by or on behalf of DDMS to Merger
Sub or any of its representatives in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.

4.14         Tax Treatment.

(a)           DDMS has not taken or agreed to take
any action that could reasonably be expected to prevent the Merger from
constituting a “reorganization” under Section 368(a) of the Code.  DDMS is not aware of any agreement, plan, or
other circumstance that could reasonably be expected to prevent the Merger from
so qualifying.

(b)           In the Merger, DDMS will transfer at
least 70% of the fair market value of its gross assets and at least 90% of the
fair market value of its net assets held by it immediately prior to the
Merger.  For this purpose, assets of DDMS
used to pay reorganization expenses and all redemptions and distributions
(other than normal dividends) and all assets disposed of prior to or in
contemplation of the Merger (other than in the ordinary course) will be
included as assets of DDMS.

(c)           The business currently carried on by
DDMS is its “historic business” within the meaning of Treasury Regulation
Section 1.368-1(d) and no assets of DDMS have been sold, transferred, or
disposed, which would prevent DDMS from using a “significant portion” of its “historic
business assets” in a business following the Merger, as such terms are used in
Treasury Regulation Section 1.368-1(d).

ARTICLE V.  REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDERS

As a material inducement for Merger Sub
to enter into this Agreement and to consummate the transactions contemplated
hereby, the Shareholders hereby jointly and severally make the following
representations and warranties as of the date hereof, each of which is relied
upon by Merger Sub regardless of any investigation made or information obtained
by or on behalf of Merger Sub:

5.1           Power and Authority; Ownership.

(a)           Each Shareholder is an adult individual with full
power and authority to own his properties, to manage his fiscal affairs and to
enter into this Agreement and each of the Related Agreements to which he is a
party and to agree to the transactions contemplated hereby and thereby and to
perform all of his obligations hereunder and thereunder.  No Shareholder is subject to any legal
disability which would prevent such Shareholder from performing under this
Agreement or any Related Agreement, and no order has been entered appointing a
receiver for any Shareholder or any of such Shareholder’s assets.  There is no claim, action, suit or proceeding
(including, without limitation, current investigations by governmental
agencies) pending against any Shareholder seeking to enjoin the execution and
delivery of this Agreement, the Related Agreements or consummation of the
transactions contemplated hereby or thereby.

(b)           This Agreement and each of the Related Agreements to
which any Shareholder is a party constitute the legal, valid and binding
obligations of such Shareholder, enforceable against such Shareholder, in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights and remedies generally and subject, as to

 10
 

enforceability, to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).

(c)           Each Shareholder owns that number of DDMS Shares set
forth in Schedule 5.1(c), which constitutes all of the issued and
outstanding membership interests of DDMS. 
Each Shareholder has good and marketable title to all of the DDMS Shares
set forth next to such Shareholder’s name on Schedule 5.1(c), free and
clear of all Encumbrances and restrictions, legal or equitable, of every kind.
Each Shareholder has full and unrestricted legal right, power, and authority to
sell, assign, and transfer the DDMS Shares held by such Shareholder without
obtaining the consent or approval of any other person, entity, or governmental
authority and the delivery of the DDMS Shares to Merger Sub pursuant to this
Agreement will transfer valid title thereto, free and clear of all
Encumbrances, claims, and restrictions of every kind, except for restrictions
on transferability imposed by federal and state securities laws.  Each Shareholder hereby waives, as of the
Closing Date, all rights that exist pursuant to contractual rights or charter
document provisions relating to the transferability of DDMS Shares, as and to
the extent necessary to permit the consummation of the transactions provided
for herein.

5.2           Securities Matters.  Each Shareholder
understands that none of the shares of InfoLogix Stock included in the Merger
Consideration (including the shares of InfoLogix Stock underlying any option
grants pursuant to Section 8.3) have been registered under the
Securities Act, on the grounds that the issuance thereof to the Shareholders in
connection with the transactions contemplated by this Agreement and the Related
Agreements is exempt from registration pursuant to Section 4(2) of the
Securities Act and/or Regulation D promulgated under the Securities Act (“Regulation
D”), and that the reliance of Merger Sub on such exemptions is predicated
in part on the representations, warranties, covenants and acknowledgements set
forth in this Section 5.2:

(a)           The InfoLogix Stock will be acquired by each
Shareholder for such Shareholder’s own account, not as a nominee or agent, for
investment and without a view to resale or other distribution within the
meaning of the Securities Act, and such Shareholders will not distribute or
transfer any of the InfoLogix Stock in violation of the Securities Act.

(b)           Each
Shareholder acknowledges and confirms that (i) InfoLogix has made available to
the Shareholders the opportunity to ask questions of and receive answers from
InfoLogix’s officers and directors concerning the terms and conditions of the
issuance of the InfoLogix Stock and the business and financial condition of
InfoLogix, (ii) he has had an opportunity to review a copy of all of InfoLogix’s
filing’s with the United States Securities and Exchange Commission, including
the Forms 8-K filed by InfoLogix on December 5, 2006 and March 15, 2007, and
(iii) he has received to his satisfaction, such additional information, in
addition to that set forth herein, about the business and financial condition
of InfoLogix and the terms and conditions of this Agreement as he has
requested.

(c)           Each Shareholder: (i) acknowledges that the InfoLogix
Stock to be issued to him is not registered under the Securities Act and must
be held indefinitely by such Shareholder unless the InfoLogix Stock is
subsequently registered under the Securities Act or an exemption from
registration is available, (ii) is aware that any routine sales of the
InfoLogix Stock made under Rule 144 of the Securities and Exchange Commission
under the Securities Act may be made only in limited amounts and in accordance
with the terms and conditions of that Rule and that in such cases where the
Rule is not applicable, registration or compliance with some other registration
exemption will be required, (iii) is aware that Rule 144 is not now and for a
period of at least one year following the Closing Date hereof will not be,
available for use by such Shareholder for resale of the InfoLogix Stock, and
(iv) is aware that InfoLogix is not obligated to register any sale, transfer or
other disposition of the InfoLogix Stock.

(d)           Each Shareholder is an “accredited investor” (as such
term is defined in Rule 501(a) of Regulation D) and has such knowledge and
experience in financial and business matters that he is fully capable of
evaluating the risks and merits of his investment in the InfoLogix Stock.

(e)           Each
Shareholder acknowledges and agrees that the certificates representing the
InfoLogix Stock issuable to such Shareholder will contain a restrictive legend
noting the restrictions on transfer described in 

 

 11

this Section and under federal and applicable state securities laws, and
that appropriate “stop-transfer” instructions will be given to InfoLogix’s
stock transfer agent.

(f)            Each
Shareholder acknowledges and agrees that he will not sell or otherwise transfer
or dispose of any of the InfoLogix Stock or any interest therein without the
prior satisfaction of one of the following conditions:

(i)        InfoLogix shall have received a written
opinion of counsel to the Shareholder in form and substance satisfactory to InfoLogix,
in the exercise of its reasonable judgment, or a copy of a “no-action” or
interpretive letter of the SEC, specifying the nature and circumstances of the
proposed transfer and indicating that the proposed transfer will not be in
violation of any of the registration provisions of the Securities Act of 1933
(the “Securities Act”) and the rules and regulations promulgated thereunder; or

(ii)       InfoLogix shall have received an opinion
from its own counsel to the effect that the proposed transfer will not be in
violation of any of the registration provisions of the Securities Act and the
rules and regulations promulgated thereunder.

5.3           No Violations of Laws or Agreements, Consents or Defaults.

(a)           The execution and delivery of this Agreement by the
Shareholders and the consummation by the Shareholders of the transactions
contemplated by this Agreement and the Related Agreements will not result in
any breach or violation of any of the terms or provisions of, or constitute a
default under any statute, order, decree, proceeding, rule, or regulation of
any court or governmental agency or body, United States or foreign, having
jurisdiction over any Shareholder, or any assets of any Shareholder.

(b)           The
delivery by the Shareholders’ of this Agreement, the Related Agreements and the
consummation by the Shareholders of the transactions contemplated hereby and
thereby will not result in a breach or violation of the term of, or constitute
a default under, or require notice to any third party under, any agreement, instrument,
or commitment to which any Shareholder is party, by which any Shareholder is
bound, or to which any of the Shareholders’ assets are subject, and no consent
or approval is required from any third party for the transactions contemplated
by this Agreement and the Related Agreements other than such consents or
approvals that have been obtained.

5.4           Brokers.  No Person will
have, as a result of the transactions contemplated by this Agreement, any valid
right to, interest in or claim upon Merger Sub, DDMS, or the Surviving
Corporation for any commission, fee or other compensation as a finder or broker
because of any act or omission by any Shareholder.

ARTICLE VI.  REPRESENTATIONS AND
WARRANTIES OF INFOLOGIX AND MERGER SUB

As a material inducement for DDMS and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, InfoLogix and
Merger Sub jointly and severally hereby make the following representations and
warranties as of the date hereof, each of which is relied upon by DDMS and the
Shareholders regardless of any investigation made or information obtained by
DDMS and the Shareholders:

6.1           Organization, Existence and Capital Stock.

(a)           Each of InfoLogix and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary corporate power to own all
of its property and assets, to incur all of its liabilities and to carry on its
business as presently conducted.  Each of
InfoLogix and Merger Sub is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
business or its ownership of property makes such qualification necessary, other
than where such failure to so qualify would, individually or in the aggregate,
not have a material adverse effect on InfoLogix or the Merger Sub.

 12
 

 

(b)           The authorized capital stock of Merger Sub consists
of common stock, $.01 par value per share, 1,000 shares of which are validly
authorized and 1,000 shares of which are validly issued, outstanding, fully
paid and non-assessable.  The
authorized capital stock of InfoLogix consists of preferred stock, $0.00001 par
value per share, 10,000,000 shares of which are validly authorized and none of
which is issued or outstanding, and of common stock, $0.00001 par value per
share, 100,000,000 shares of which are validly authorized and 23,595,663 shares
of which are validly issued, outstanding, fully paid and non-assessable.

(c)           All of the shares of InfoLogix Stock issued in
connection with the transactions contemplated by this Agreement will be, when
issued in accordance with this Agreement, duly authorized, validly issued,
fully paid, nonassessable, and free of all preemptive rights.  The shares of InfoLogix Stock issued to each
Shareholder in connection with the transactions contemplated by this Agreement
will be issued in the name of such Shareholders, as recorded in the Books and
Records of DDMS, with such Shareholders as record holders of such shares, and each
Shareholder shall have good and marketable title to such shares of InfoLogix
Stock, free of any liens and Encumbrances, other than those created by or
through such Shareholders pursuant to this Agreement or otherwise.

6.2           Power and Authority.  Each of InfoLogix
and Merger Sub has the corporate power to execute, deliver and perform this
Agreement and the Related Agreements and to consummate the transactions
contemplated hereby, and has taken all action required by law, each of its
certificate of incorporation, its bylaws or otherwise, to authorize the
execution and delivery of this Agreement and such related documents.  This Agreement is a valid obligation of each
of InfoLogix and Merger Sub and is legally binding and enforceable against each
of InfoLogix and Merger Sub in accordance with its terms.

6.3           No Violations of Laws.

(a)           The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement and the Related
Agreements will not result in any breach or violation of any of the terms or
provisions of, or constitute a default under, (i) the certificate of
incorporation or bylaws of InfoLogix or Merger Sub or (ii) any statute, order,
decree, proceeding, rule, or regulation of any court or governmental agency or
body, United States or foreign, having jurisdiction over InfoLogix, Merger Sub
or any of their assets.

(b)           The
delivery by InfoLogix and Merger Sub of this Agreement, the Related Agreements
and the consummation by each of InfoLogix and Merger Sub of the transactions
contemplated hereby will not result in a breach or violation of the term of, or
constitute a default under, or require notice to any third party under, any
agreement, instrument, or commitment to which either InfoLogix or Merger Sub is
party, by which each is bound, or to which any of either InfoLogix or Merger
Sub’s assets are subject, and no consent or approval is required from any third
party for the transactions contemplated by this Agreement and the Related
Agreements.

(c)           Each of InfoLogix and Merger Sub is not in default
under, or in violation of any provision of, its certificate of incorporation or
bylaws, or in any material default under any promissory note, indenture, or any
evidence of indebtedness or security thereto, lease, purchase contract, or
other commitment, or any other agreement to which it is a party.

6.4           Governmental
Consents.  All material
consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or
state governmental authority on the part of InfoLogix or the Merger Sub
required in connection with the consummation of the Merger shall have been
obtained prior to, and be effective as of, the Closing.

6.5           Brokers. No Person
will have, as a result of the transactions contemplated by this Agreement, any
valid right to, interest in or claim upon InfoLogix or Merger Sub for any
commission, fee or other compensation as a finder or broker because or any act
or omission by Merger Sub or its Affiliates.

6.6           Litigation Claims. There is no Claim pending or, to the knowledge
of InfoLogix or Merger Sub, threatened that questions the validity of this
Agreement or the Related Agreements or any action taken or to be taken by
InfoLogix or Merger Sub in connection with the consummation of the transactions
contemplated hereby or 

 13
 

thereby or which seeks to prohibit, enjoin or otherwise challenge any of
the transactions contemplated hereby or thereby.

6.7           Interim
Operations of Merger Sub. Merger Sub was formed by InfoLogix solely for the purpose
of engaging in the transactions contemplated by this Agreement, has engaged in
no other business activities and has conducted its operations only as
contemplated by this Agreement.  Merger
Sub has no liabilities other than those incurred in connection with the
transactions contemplated by this Agreement and, except for a subscription
agreement pursuant to which all of Merger Sub’s authorized capital stock was
issued to InfoLogix, is not a party to any agreement other than this Agreement
and agreements with respect to the appointment of registered agents and similar
matters.

6.8           Tax
Treatment.

(a)           Neither
InfoLogix nor any of its Affiliates has taken or agreed to take any action
(other than actions contemplated by this Agreement) that could reasonably be
expected to prevent the Merger from constituting a “reorganization” under
Section 368(a) of the Code.  InfoLogix is
not aware of any agreement, plan, or other circumstance that could reasonably
be expected to prevent the Merger from so qualifying.

(b)           InfoLogix
has no plan or intention to liquidate Merger Sub following the Merger or cause
Merger Sub to sell or otherwise dispose of any assets of DDMS acquired in the
Merger, except for dispositions made in the ordinary course of business of
transfers described in Section 368(a)(2)(C) of the Code and the Treasury
Regulations issued thereunder.

(c)           Following
the Merger, InfoLogix will cause Merger Sub to continue DDMS’s historic
business or to use a significant portion of DDMS’ historic business assets in a
business, in each case within the meaning of Section 1.368-1(d) of the Treasury
Regulations, assuming that the assets of, and the business conducted by, DDMS
on the Closing Date constitute DDMS’ historic business assets and historic business,
respectively.

(d)           Following
the Merger, Merger Sub has no plan or intention to issue additional shares that
would result in InfoLogix losing control of Merger Sub within the meaning of
Section 368(c) of the Code.

(e)           InfoLogix
has no plan or intention to reacquire, and, to InfoLogix’s knowledge, no person
related to InfoLogix within the meaning of Treasury Regulations Section
1.368-1(e)(2) has a plan or intention to acquire, any of the InfoLogix stock
issued in the Merger.

ARTICLE VII.  SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION

7.1           Survival of Representations. 
All representations and warranties made by any party to this Agreement
or pursuant hereto, as modified by any Schedule, exhibit, certificate or other
document executed and delivered pursuant hereto, shall survive the Closing and
any investigation made by or on behalf of any party hereto for a period of two
years; provided, however, that the representations and warranties set forth in Sections
4.1, 4.7, 4.9, 5.1(c), and 5.2 shall survive
indefinitely after the Closing; and provided further, that the representations
and warranties set forth in Section 4.4 shall survive after the Closing
until 60 days after the expiration of the applicable statute of
limitations.  All representations and
warranties contained herein or in any schedule, exhibit, certificate or other
document executed and delivered pursuant hereto shall be deemed representations
and warranties for purposes of this Section. 
The covenants and agreements of InfoLogix, Merger Sub and the
Shareholders made herein shall survive the Closing and shall continue in full
force and effect indefinitely except as and to the extent set forth in the
Agreement.  The right to indemnification
or other remedy based upon such representations and warranties shall not be
affected by any investigation conducted with respect to, or any knowledge
acquired at any time, whether before or after execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of
any such representation or warranty. 
Each of InfoLogix, Merger Sub, DDMS and the Shareholder shall notify the
other parties in writing of the discovery of any inaccuracy in any
representation or warranty of any party hereto.

 14
 

 

7.2           Indemnification.

(a)           Subject
to the terms and conditions of this Article VII, the Shareholders and, prior to
the Closing, DDMS shall jointly and severally, indemnify, defend and hold
harmless InfoLogix, Merger Sub and, following the Closing, the Surviving
Corporation (and their respective officers, directors, employees, Affiliates,
successors or assigns other than the Shareholders) (collectively, the “InfoLogix
Indemnified Parties”), from and against all Claims, assessments, losses,
damages, liabilities, deficiencies, judgments, settlements, costs and expenses,
including interest, penalties and reasonable attorneys’ fees and expenses
incurred in enforcing this indemnification or in any litigation between the
parties or with third parties (collectively, “Damages”) asserted
against, resulting to, imposed upon, suffered or incurred by a InfoLogix
Indemnified Party, directly or indirectly, by reason of or resulting from (i)
any failure of DDMS or the Shareholders to duly perform or observe any covenant
or agreement to be performed or observed by any of them, pursuant to this
Agreement or any Related Agreement or (ii) a breach of any representation or
warranty of DDMS or the Shareholders contained in or made pursuant to this
Agreement or any of the Related Agreements.

(b)           Subject to the terms and conditions of this Article
VII, Merger Sub and InfoLogix (and, after the Effective Time, the Surviving
Corporation) shall indemnify, defend and hold harmless the Shareholders (and
the Shareholders’ respective heirs, representatives and assigns) (collectively,
the “DDMS Indemnified Parties”) at any time after consummation of the
Closing, from and against all Damages asserted against, resulting to, imposed
upon or incurred by DDMS Indemnified Parties, directly or indirectly, by reason
of or resulting from: (i) the assertion against any Shareholder of any
claim for payment or performance of any obligation, debt, or liability in
connection with Merger Sub’s ownership or operation of the Business from and
after the Closing, (ii) any failure of Merger Sub or InfoLogix to duly perform
or observe any covenant or agreement to be performed or observed by it pursuant
to this Agreement or any Related Agreement; or (iii) a breach of any
representation or warranty of Merger Sub or InfoLogix contained in or made
pursuant to this Agreement.

(c)           As
between the Shareholders, and any Affiliate of any Shareholder, on the one
hand, and InfoLogix, Merger Sub and any Affiliate of InfoLogix or Merger Sub,
on the other hand, the remedies, rights and obligations set forth in this Section
7.2 will be the exclusive remedies, rights and obligations with respect to
the Damages referred to in this Section 7.2 to the extent that such
Damages arise out of or are related to any inaccuracy of the representations or
warranties set forth in this Agreement, except with respect to matters of
fraud, for which the parties shall be entitled to pursue all available remedies
at law or in equity.  Without limiting
the foregoing, as a material inducement to entering into this Agreement, to the
fullest extent permitted by law, each of the parties waives any claim or cause
of action that it otherwise might assert based upon any inaccuracy of the
representations or warranties set forth in this Agreement, except for claims or
causes of action brought under and subject to the terms and conditions of this Section
7.2.

(d)           No
Indemnifying Party shall be liable to or obligated to indemnify any Indemnified
Party hereunder for any punitive or exemplary damages, or any consequential,
special or multiple damages, except to the extent such damages have been
recovered by a third person (including a governmental authority) and are the
subject of a third party claim for which indemnification is available under
this Article VII.

(e)           Notwithstanding
anything to the contrary set forth in this Article VII, in the absence of a
showing of fraud, intentional misrepresentation or intentional breach or
omission by or on behalf of an Indemnifying Party, any Damages payable by the
Shareholders pursuant to this Section 7.2 shall be satisfied solely from (i)
the proceeds of the Initial Cash Payment and (ii) the amount of any
consideration paid to LM Consulting LLC from time to time under the Consulting
Agreement (collectively, the “Cap Amount”).  In addition, notwithstanding anything set
forth in this Agreement, a Shareholder shall not be liable for Damages in
excess of such Shareholder’s Pro Rata Percentage of the Cap Amount, except in
the event of fraud, intentional misrepresentation or intentional breach or
omission by or on behalf of such Shareholder, in which case the Cap Amount
shall not apply.

(f)            The
determination of any Damages under this Article VII shall be net of the present
value of any Tax (or other) benefit actually derived by the party bearing such
Damage as a result thereof.  For purposes
of this Section 7.2, a Tax benefit shall be calculated by using the highest
marginal federal, state, local or non-U.S. rate

 15
 

applicable
to the party deriving such benefit for the relevant taxable period and by using
an interest rate equal to the “prime rate” as set forth in The Wall Street
Journal on the date of such determination. 
Any payments made pursuant to this Article VII shall be deemed to be a
proportionate adjustment of the Merger Consideration.

7.3           Conditions of Indemnification. 
The obligations and liabilities of Merger Sub, on the one hand, and the
Shareholders, on the other hand, as indemnifying parties (each, an “Indemnifying
Party”) to indemnify DDMS Indemnified Parties or Merger Sub Indemnified
Parties, as applicable (each, an “Indemnified Party”), under Section
7.2 with respect to claims made by third parties shall be subject to the
following terms and conditions:

The Indemnified
Party shall give written notice to the Indemnifying Party of any Damages with
respect to which it seeks indemnification promptly after the discovery by such
party of any matters giving rise to such claim for indemnification; provided, however, that the failure
of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under Section 7.2 unless it
shall have been prejudiced by the omission to provide such notice.  In case any claim is brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Indemnifying Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to the Indemnified
Party under Section 7.2 for any legal or other expense subsequently
incurred by the Indemnified Party in connection with the defense thereof; provided, however, that (i) if the
Indemnifying Party shall elect not to assume the defense of such claim or
action or (ii) if the Indemnified Party reasonably determines that there may be
a conflict between the positions of the Indemnifying Party and the Indemnified
Party in defending such claim, then separate counsel shall be entitled to
participate in and conduct such defense, and the Indemnifying Party shall be
liable for any reasonable legal or other expenses incurred by the Indemnified
Party in connection with such defense (but not more than one counsel).  The Indemnifying Party shall not be liable
for any settlement of any claim affected without its written consent, which
consent shall not be unreasonably withheld. 
The Indemnifying Party shall not, without the Indemnified Party’s prior
written consent, which consent shall not be unreasonably withheld, settle or
compromise any claim to which the Indemnified Party is a party or consent to
entry of any judgment in respect thereof. 
The Indemnifying Party further agrees that it will not, without the
Indemnified Party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof in any pending or
threatened claim in respect of which indemnification may be sought hereunder
(whether or not the Indemnified Party is an actual or potential party to such
claim) unless such settlement or compromise includes an unconditional release
of the Indemnified Party from all liability arising out of such claim.

ARTICLE VIII.  COVENANTS.

8.1           Confidentiality.  InfoLogix, Merger
Sub, DDMS and the Shareholders shall hold, and shall use their best efforts to
cause their respective auditors, attorneys, financial advisors, bankers and
other consultants and advisors to hold in strict confidence, unless compelled
to disclose by judicial or administrative process or by other requirements of
law, all documents and information concerning the other party furnished to it
by the other party or its representatives, including the terms and conditions
of the Agreement (except to the extent that such information shall be shown to
have been (a) in the public domain through no fault of such party or (b) later
lawfully acquired from other sources by the party to which it was furnished) (“Confidential
Information”), and each party shall not release or disclose such
Confidential Information to any other Person, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in connection
with the transactions contemplated by this Agreement.

8.2           Maintenance and Expansion of
Patents.  InfoLogix shall commit such funds (“Patent
Expansion Funds”) as it deems reasonably necessary, but in no event less
than $250,000 before the first anniversary of the date of Closing, to apply
toward the maintenance and expansion of the Patents according to a defined
Patent Expansion Plan (as defined herein). 
No later than 90 days after the Effective Time, the Surviving
Corporation, in collaboration with patent counsel, will develop a plan using
its sole discretion which will describe and delineate additional Patent filings
and registrations that should be prepared/filed to expand, modify, change,
and/or focus the scope of protection for the technology or processes described
by the Patents (“Patent Expansion Plan”).  The Patent Expansion Plan will further
describe the money required for such additional Patent filings and
registrations.

 16
 

 

8.3           Advisory Board.

(a)           Within 90 days following the
Effective Time, the Board of Directors of the Surviving Corporation (the “Board”)
shall appoint an advisory board (the “Advisory Board”), which shall have
such powers and responsibilities as deemed appropriate by the Board.  The Board shall initially appoint Louis
Heidelberger and Marc Niemiec to serve on the Advisory Board at the pleasure of
the Board until the earlier of their resignation or removal.

(b)           Upon
their appointment to the Advisory Board, InfoLogix shall grant each of Messrs.
Heidelberger and Niemiec non-qualified options to acquire 30,000 shares of
InfoLogix Stock.  One-third of such
options shall be deemed to have vested on the first anniversary of the
Effective Time, with an additional one-third of such options to vest on each of
the second and third anniversaries of the Effective Time, contingent upon the
continued service of Messrs. Heidelberger and Niemiec on the Advisory Board.  The term during which such options may be
exercised and all other provisions of such options shall be set forth in a
stock option grant agreement entered into at the time of grant of such options.

(c)           All
information and documents that Messrs. Heidelberger and Niemiec receive
regarding InfoLogix and its business during their service on the Advisory Board
shall be deemed Confidential Information for the purposes of Section 8.1.

8.4           Reversionary
Rights.  InfoLogix will
undertake reasonable steps to ensure that the Protected Items (as defined
herein) remain in full force and effect. 
In the event that InfoLogix makes an affirmative determination not to
maintain or procure a patent, patent application or invention, including any
continuation, division or extension of same (“Protected Item”) in a
jurisdiction where Seller owned the right to such Protected Item prior to
Closing, InfoLogix shall provide the Shareholders with notice of its
determination not to maintain or procure a Protected Item, which notice shall
be no less than thirty days prior to the termination of the rights of the
Protected Item, and  the Shareholders
shall have the right of reversion to such Protected Item, with respect only to
such jurisdiction, from InfoLogix for nominal consideration of $1.00.

8.5           Lock-up on
Transfer of Shares.

(a)           Except
as set forth in this Agreement, for a one-year period beginning on the
Effective Date (the “Lock-up Period”), the Shareholders agree not,
directly or indirectly, to sell, offer to sell, contract to sell, assign,
pledge, hypothecate, encumber, or otherwise transfer, or enter into any
contract, option, swap, hedge, derivative or other arrangement or understanding
with respect to the sale, assignment, pledge, or other disposition of
(collectively, “Transfer”) any rights with respect to any InfoLogix
Stock issued to the Shareholders as part of the Merger Consideration.  The foregoing restriction has been expressly
agreed to preclude the Shareholders from engaging in any hedging or other
transaction during the Lock-up Period that is designed to or reasonably
expected to lead to or result in a Transfer of such InfoLogix Stock.  Such prohibited hedging or other transaction
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale, or grant of any right (including, without
limitation, any put or call option) with respect to the InfoLogix Stock or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
InfoLogix Stock.

(b)           The
Shareholders also agree and consent to the entry of stop transfer instructions
with InfoLogix’s Transfer Agent and Registrar against the Transfer of InfoLogix
Stock held by the Shareholders except in compliance with the terms and
conditions of this Agreement.

 

 17

8.6           Non-Competition.

(a)           As a material and significant
inducement to InfoLogix to enter into this Agreement, and without allocating
any portion of the Merger Consideration, each of the Shareholders agrees that,
for the longer of (i) three years from and after the Closing Date or (ii) the
term of such Shareholder’s service on the Advisory Board, such Shareholder
shall not, directly or indirectly, either individually, collectively or in
combination, for itself or on behalf of any other Person, engage or be financially
interested in (as an agent, consultant, director, employee, independent
contractor, officers, owner, partner, principal or otherwise) any business that
directly or indirectly competes with the business of InfoLogix and the
Surviving Corporation as conducted or proposed to be conducted as of the date
of this Agreement (a “Competing Business”). 
This restriction shall apply in North America.  Nothing in this Section 8.6 shall prevent (i)
the Shareholders from acquiring and developing a Protected Item pursuant to
Section 8.4 of this Agreement, provided that such Protected Item is not used in
connection with or transferred to a Competing Business or (ii) a Shareholder
from owning for investment up to five percent of any class of equity security
of an entity whose securities are traded on a national securities exchange or
market.  Further, if a Shareholder is an
attorney, such Shareholder may engage in the practice of law in accordance with
the canons of ethics of the state or states in which such Shareholder is
authorized or may be authorized to practice law, subject to the confidentiality
obligations set forth in Section 8.1 hereof.

(b)           Each of
the Shareholders acknowledges that the restrictions contained in this Section
8.6 applicable to such Shareholder, in light of the nature of the business
in which InfoLogix and its Affiliates is engaged, are reasonable and necessary
to protect the legitimate interests of InfoLogix and its Affiliates, and that
any violation of these restrictions may result in irreparable injury to
InfoLogix and its Affiliates.  Each of
the Shareholders therefore agrees that, in the event of such Shareholder’s
violation of any of the restrictions applicable to such Shareholder, InfoLogix
and its Affiliates shall be entitled to seek from any court of competent
jurisdiction: (i) preliminary and permanent injunctive relief against such
Shareholder; (ii) damages from such Shareholder (including InfoLogix’s
reasonable legal fees and other costs and expenses); and (iii) an equitable
accounting of all compensation, commissions, earnings, profits and other
benefits to such Shareholder arising from such violation; all of which rights
shall be cumulative and in addition to any other rights and remedies to which
InfoLogix and its Affiliates may be entitled as set forth herein or as a matter
of law.

(c)           Each of
the Shareholders agrees that if any portion of the restrictions contained in
this Section 8.6 applicable to such Shareholder, or the application
thereof, is construed to be invalid or unenforceable, the remainder of such
restrictions or the application thereof shall not be affected and the remaining
restrictions will have full force and effect without regard to the invalid or
unenforceable portions.  If any
restriction is held to be unenforceable because of the area covered, the
duration thereof or the scope thereof, each of the Shareholders agrees that the
court making such determination shall have the power to reduce the area and/or
the duration, and/or limit the scope thereof, and the restriction shall then be
enforceable in its reduced form.

(d)           If any
Shareholder violates any restriction applicable to such Shareholder, the period
of such violation (from the commencement of any such violation until such time
as such violation shall be cured by such Shareholder) shall not count toward or
be included in the restrictive period applicable to such Shareholder.

8.7           Tax Free Transaction.  From and after the date of this Agreement,
including after Closing, each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take any actions or cause any
actions to be taken which could reasonably be expected to prevent the Merger
from qualifying, as a “reorganization” under Section 368(a) of the Code.

ARTICLE IX.  MISCELLANEOUS

9.1           Notices.  Any communications
required or desired to be given hereunder shall be deemed to have been properly
given if sent by hand delivery or by facsimile, and overnight courier to the
parties hereto at the following addresses, or at such other address as either
party may advise the other in writing from time to time:

 18
 

 

If to InfoLogix or the Surviving
Corporation:

InfoLogix, Inc.

101 E. County Line Road

Hatboro, PA 19040

Attention:  David T. Gulian

Facsimile:  (215) 604-0695

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

Drinker Biddle & Reath LLP

One Logan Square

18th and Cherry Streets

Philadelphia, PA  19103

Attention:  Stephen T. Burdumy

Facsimile:  (215) 988-2757

If to the Shareholders:

Louis Heidelberger

357 Spring Mill Road

Villanova,
PA 19085

Mark Niemiec

102 Surrey Lane

Ponte
Vedra Beach, FL 32082

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

Reed Smith LLP

2500 One Liberty Place

1650 Market Street

Philadelphia, PA 19103

Attention:  Vincent S. Capone

Facsimile:  (215) 851-1420

All such communications shall be deemed
to have been delivered on the date of hand delivery or facsimile or on the next
Business Day following the deposit of such communications with an overnight
courier.

9.2           Further Assurances.  Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of this
Agreement, including, without limitation, any documents necessary to transfer
the Intellectual Property to the Surviving Corporation.

9.3           Governing Law.  This Agreement
shall be interpreted, construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania, applied without giving effect to any conflicts of
law principles.

9.4           Right of Setoff.  Notwithstanding any
provision hereof to the contrary, InfoLogix and Merger Sub shall be entitled to
set-off amounts due from InfoLogix or Merger Sub to LM Consulting LLC pursuant
to the terms of the Consulting Agreement against any amounts due to InfoLogix
or Merger Sub from the Shareholders hereunder, whether by reason of
indemnification under Article VII, or otherwise.  Any set-off shall be applied against
amounts payable to LM Consulting LLC in the chronological order all amounts of
every kind payable to LM Consulting LLC are due until the set-off is
complete. Notwithstanding any provision hereof to the contrary, upon making a
claim for indemnification under Article VII, Merger Sub may withhold from
amounts otherwise due under the Consulting Agreement an amount equal to
InfoLogix’s or Merger Sub’s reasonable estimate of the amount of such claim
until such time as the actual amount of InfoLogix’s or Merger Sub’s
indemnification claim, and right of set-off hereunder, is determined.

 19
 

 

9.5           Consent to Jurisdiction.  Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any state or Federal court
located in the Commonwealth of Pennsylvania in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the Commonwealth of Pennsylvania.

9.6           Integration of Exhibits and Schedules. 
All Exhibits and Schedules to this Agreement are integral parts of this
Agreement as if fully set forth herein.

9.7           Entire Agreement.  This Agreement, the
Related Agreements, including all Exhibits and Schedules attached hereto and
thereto contain the entire agreement of the parties and supersede any and all
prior or contemporaneous agreements between the parties, written or oral, with
respect to the transactions contemplated hereby.  Such agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.

9.8           Expenses.  Except as expressly
provided otherwise, each party hereto will bear its own costs and expenses
(including fees and expenses of auditors, attorneys, financial advisors,
bankers, brokers and other consultants and advisors) incurred in connection
with this Agreement, the Related Agreements and the transactions contemplated
hereby and thereby.

9.9           Counterparts.  This Agreement may
be executed in several counterparts, each of which, when so executed, shall be
deemed to be an original, and such counterparts shall together constitute and
be one and the same instrument.

9.10         Binding Effect.  This Agreement
shall be binding on, and shall inure to the benefit of, the parties hereto, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.  No party may assign any right or obligation
hereunder without the prior written consent of the other parties.

[SIGNATURE PAGE
FOLLOWS]

 20
 

 

IN WITNESS
WHEREOF, InfoLogix, Merger Sub, DDMS and the Shareholders have caused this
Agreement and Plan of Merger to be executed by their respective duly authorized
officers, all as of the day and year first above written.

	
  INFOLOGIX,
  INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:  David T. Gulian

  	
   

  	
   

  
	
   

  	
  Title:    President and Chief
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INFOLOGIX-DDMS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:  David T. Gulian

  	
   

  	
   

  
	
   

  	
  Title:    President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DDMS HOLDINGS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:  Mark Niemiec

  	
   

  	
   

  
	
   

  	
  Title:    President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SHAREHOLDERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Louis Heidelberger

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mark Niemiec

  	
   

  	
   

  	
   

  
					

 

 21Exhibit
10.2

CONSULTING
AGREEMENT

THIS CONSULTING
AGREEMENT is made this 9th day of April, 2007 (“Consulting Agreement”),
by and between INFOLOGIX, INC., a Delaware corporation (the “Company”),
LM Consulting LLC, a Delaware limited liability company (“Consultant”),
and Louis Heidelberger and Mark Niemiec (the
“Representatives” and, together with Consultant, “Consultants”),
individuals residing in the Commonwealth of Pennsylvania and State of Florida,
respectively, and the owners of all of the outstanding membership interests of
Consultant.

WITNESSETH:

WHEREAS, the Company, InfoLogix-DDMS, Inc., DDMS Holdings,
LLC, and the Representatives entered into an Agreement and Plan of Merger,
dated April 9, 2007 (the “Merger Agreement”) pursuant to which DDMS
Holdings, LLC will merge with and into InfoLogix-DDMS, Inc.  (the “Merger”);

WHEREAS, the Representatives have unique expertise with respect to the
patents and other intellectual property acquired by the Company in connection
with the Merger;

WHEREAS, the Merger Agreement requires the Company to enter into this
Consulting Agreement with Consultant, and the Company desires to retain
Consultant to provide the Services (as defined below), and Consultant is
willing to be engaged by the Company in a consulting capacity as an independent
contractor, upon and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:

1.             Certain Terms.      Capitalized
terms used in this Consulting Agreement and not otherwise defined herein shall
have the respective meanings set forth in the Merger Agreement.

2.             Engagement.         The Company hereby engages Consultant,
and Consultant hereby accepts such engagement, on and subject to the terms and
conditions set forth herein, to serve the Company in a consulting capacity.

3.             Term.

(a)           The period of service of Consultant
to the Company will be for a term of ten years commencing on April 9, 2007 and
terminating on April 9, 2017, unless earlier terminated as set forth herein
(the “Consulting Period”).

(b)           The Company will be entitled to terminate this
Consulting Agreement at any time, for cause, if any of the following events
shall occur:

(i)            Consultant
or either Representative is convicted of a felony or a crime involving monies
or fraud by any court or governmental agency of competent jurisdiction;

(ii)           neither
of the Representatives are able to perform the duties required of them
hereunder due their death, disability or otherwise;

(iii)          Consultant’s
or either Representative’s gross negligence or willful misconduct in the
performance of the Services (as defined below); or

(iv)          intentional
refusal by Consultant or either Representative to perform any duty required of
them hereunder for a continuous period of three (3) calendar days after
delivery of written notice thereof to Consultant by the Company.

 

(c)           This Consulting
Agreement may be terminated at any time by mutual written consent of the
Company, Consultant and each of the Representatives.

(d)           Upon termination of
this Consulting Agreement, Consultant shall be entitled only to the consulting
fee payable under Section 5 of this Consulting Agreement accruing
through the date of termination.

4.             Duties.

(a)           Subject
to the terms and conditions hereinafter provided, the Company engages
Consultant and the Representatives to provide the services specified below (the
“Services”) related to the commercialization and development of certain
patents, patent applications, and other intellectual property acquired by the
Company in connection with the Merger, and Consultant and the Representatives
agree to provide the Services in accordance with the terms of this Consulting
Agreement.  The Services shall consist
of:

(i)            identifying  suppliers of components, containers and
packaging for drug delivery embodiments relating to the Patents;

(ii)           identifying
potential licensees of the Patents;

(iii)          advising
and assisting the Company with respect to the implementation of the Patent
Expansion Plan; and

(iv)          such
additional or different duties and services relating to the Patents as
reasonably requested by the Company and appropriate to Consultants’ abilities;

provided, however, that
the Services provided under this Consulting Agreement shall not include any
legal services performed by Louis Heidelberger or the law firm of Reed Smith
LLP.

(b)           During
the Consulting Period, the Consultants shall work with and report directly to
the President or Chief Financial Officer of the Company or other parties
designated by the President or Chief Financial Officer of the Company.

(c)           During
the Consulting Period, the Consultants shall at all times comply with, and be
subject to, such reasonable policies, procedures, rules and regulations as the
Company may establish from time to time.

(d)           In
connection with providing the Services during the Consulting Period, Consultant
shall make the Representatives available by telephone, email, or in person at
the offices of the Company, during normal business hours of the Company as
reasonably requested by the President or Chief Financial Officer.  At all times during the Consulting Period,
Consultant shall cause the Representatives to commit no less than an aggregate
of 20 hours per month to the provision of the Services.

(e)           During
the Consulting Period, Consultant shall use its best efforts to preserve and
promote the name, reputation and business of the Company.  Consultant agrees that at all times during
and after the Consulting Period, it shall take no action that could adversely
affect the name, reputation or business of the Company.

5.             Consulting Fee.

(a)           As
consideration for the services to be performed by Consultant hereunder, the
Company shall pay to Consultant, no later than 30 days after the end of each
fiscal quarter following the Effective Time, a consulting fee equal to 36% of
the Net Income (as defined below), if any, as of the end of such fiscal quarter
(the

 2
 

“Consulting Fee”).  Each
payment of the Consulting Fee shall be accompanied by a reasonably detailed
description supporting the calculation (the “Company Calculation”) of
the amount to be paid.  Consultant shall
be entitled to review each of the calculations and all supporting
documentation, if any, furnished to Consultant by the Company with respect to
the Consulting Fee.  No more than two
times per calendar year, upon 10 days prior written notice to the Company,
Consultant shall be entitled, at Consultant’s expense, to complete an
accounting of the Consulting Fee with reasonable access during the Company’s
normal business hours to the staff, books and records of the Company relating
to the calculation of the Consulting Fee (upon execution of an appropriate
confidentiality agreement) to determine the accuracy of the Company
Calculation.  If Consultant objects to
the Company Calculation of the Consulting Fee, Consultant shall notify the
Company in writing within 20 business days of receipt of the Company
Calculation, which notice shall be accompanied by a reasonably detailed
calculation (the “Consultant Calculation”) of the amount Consultant
believes should be paid.  In the event
Consultant objects to the Company Calculation, the Company and Consultant shall
jointly select an independent accounting firm to determine the appropriate
amount of the Consulting Fee.  The
determination of the independent accounting firm shall be final and binding on
the parties and shall not exceed the Consultant Calculation nor be less than
the Company Calculation. All costs related to the work of the independent
accounting firm shall be borne equally by Consultant and the Company.

(b)           As
used in Section 5(a), the term “Net Income” means an amount
calculated pursuant to the following formulas:

Until the aggregate amount of the Patent Expansion
Funds expended by InfoLogix during the term of this Consulting Agreement
exceeds $500,000:

Net Income = R
— EXP — .5 (PEF)

After the aggregate amount of the
Patent Expansion Funds expended by InfoLogix during the term of this Consulting
Agreement exceeds $500,000:

Net Income = R
— EXP — .25 (PEF)

Where:

R =                            The aggregate amount of all
(i) Settlement Income (as defined below) plus (ii) royalties or prepaid
licensing fees generated from in-force licenses of the Patents (the “Patent
Royalties”) received in cash by the Company during the period starting on
the first day of the fiscal quarter immediately following the last fiscal
quarter for which a payment of the Consulting Fee was made pursuant to this Section
5(b) and ending on the last day of the fiscal quarter for which the calculation
of Net Income is being made (such period, the “Measurement Period”);
provided, that with respect to any calculation of Net Income made before the
first payment of Consulting Fee under this Section 5(b), the Measurement
Period shall be deemed to have begun at the Effective Time.  “Settlement Income” shall mean
income received by the Company from the settlement of any claim, lawsuit,
proceeding or similar action (an “Action”) by the Company against any
person asserting a claim for infringement upon the Patents.

EXP =               During the applicable
Measurement Period the aggregate of (i) all costs, fees and expenses incurred
by the Company or its Affiliates in connection with the generation of the
Patent Royalties, including, without limitation, all legal fees incurred
related to the licensing of Patents plus (ii) all costs, fees and
expenses incurred by the Company in connection with an Action by the Company
that results in any Settlement Income being received by the Company plus
(iii) all costs, fees and expenses (including legal fees and any amounts paid
in settlement or as damages) incurred by the Company in connection with an
Action against the Company asserting that the

 3
 

Patents infringe upon a
third party’s intellectual property plus (iv) any sales and use taxes
incurred by the Company in connection with any Patent Royalties or any
Settlement Income.

PEF =                 The aggregate Patent
Expansion Funds expended by InfoLogix or its Affiliates during the applicable
Measurement Period.

6.             Confidentiality.  Consultant and each Representative covenants
and agrees that it will not, and will cause its advisors, employees and agents
not, to the detriment of the Company, at any time during or after the
termination of the Consulting Period, (a) reveal, divulge or make known or
accessible to any person or business entity (other than the Company or its
officers, employees, or agents who need to know such information) any
Confidential Information, unless with written permission of the Company or as a
result of judicial or administrative process or by requirements of law, or (b)
use any Confidential Information for its own account or the account of any
other person.  For the purposes of this
Agreement, “Confidential Information” shall include any and all
documents and information, including any trade secret, technical data, client
list, file or record, financial data, future plans, licensed technology,
whether in concept or development stage, books or records, marketing policy or
plan, or any other proprietary or confidential information used by the Company,
or any of its services, clients, or agents. 
Consultant and each Representative further covenants and agrees that it
shall retain all such knowledge and information which they shall acquire or
develop respecting such Confidential Information in trust for the sole benefit
of the Company and its successors and assigns.

7.             Covenant
Not to Compete.  Consultant and each
Representative hereby agrees as follows:

(a)           During and for a period of three
years following the termination of the Consulting Period, unless expressly
consented to in writing by the Company, Consultant and each Representative
shall not, directly or indirectly, either individually, collectively, or in
combination,  through any entity or
agent:

(i)            operate, establish, manage, own,
control, invest in, be employed by, provide financial assistance to, or provide
consulting or other services relating to the operation, establishment,
management, ownership, or control of, any business in North America similar to
the business of the Company, as conducted or proposed to be conducted as of the
date of this Consulting Agreement (a “Competing Business”) ;

(ii)           become a stockholder, partner, owner,
officer, director, or employee or agent of, or a consultant to or give
financial or other assistance to, any person or entity considering engaging in
any such activities or so engaged; or

(iii)          solicit or contact, with a view to
engaging or employing, or actually engage or employ, any person who is, or at
any time was, an employee or consultant of the Company.

Nothing in this Section 7 shall prevent the
Representatives from acquiring or developing a Protected Item pursuant to
Section 8.4 of the Merger Agreement; provided that such Protected Item is not
used in connection with or transferred to a Competing Business.  Further, if a Representative is an attorney,
such Representative may engage in the practice of law in accordance with the
canons of ethics of the state or states in which such Representative is
authorized or may be authorized to practice law, subject to the confidentiality
obligations set forth in Section 6 hereof.

(b)           During and for a period of three
years following the termination of the Consulting Period, Consultant and each
Representative shall not, directly or indirectly through any entity, family
member or agent, engage or participate in any effort or act to induce any of
the agents, associates, employees or independent contractors of the Company to
take any action, or to refrain from taking any such action, which is or could reasonably
be expected to be disadvantageous to the Company, including but not limited to,
the solicitation of the Company’s suppliers, associates, employees or
independent contractors to cease doing business, or to discontinue their
association or employment, with the Company.

 

 4

(c)           The Company, Consultant and each
Representative each acknowledge that damages alone will be an inadequate remedy
for any breach or violation of any of the provisions of this Section 7
and that the Company, in addition to all other remedies under this Consulting
Agreement, shall be entitled as a matter of right to (i) injunctive relief,
including specific performance, with respect to any such breach or violation or
threatened breach or violation, in any court of competent jurisdiction; (ii)
damages from Consultants; and (iii) an equitable accounting of all
compensation, commissions, earnings, profits, and other benefits to Consultants
arising from such violation; all of which rights shall be cumulative and in
addition to any other rights and remedies to which the Company and its
Affiliates may be entitled as set forth in this Consulting Agreement, the
Merger Agreement, or as a matter of law.

(d)           If any court of competent
jurisdiction finds any provision of this Section 7 to be invalid or
unenforceable as to the scope or duration thereof, such finding shall not
render this Section 7 invalid or unenforceable, and the invalid or
unenforceable provision of this Section 7 shall be deemed to be modified
to be within the limits of enforceability or validity.

8.             Assignment
of Developments.  In the event that,
at any time or times during the Consulting Period, Consultants (either alone or
with others) make, conceive, discover or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret or intellectual property right whatsoever or any interest therein,
whether or not patentable or registrable under copyright or similar statutes or
subject to analogous protection (each, a “Development”), that (i) relates to
the actual or anticipated business of the Company or any of the products or
services being developed, manufactured or sold by the Company or which may be
used in relation therewith, (ii) results from tasks assigned to Consultants by
the Company, whether or not during normal business hours, or (iii) results from
the use of premises or personal property (whether tangible or intangible)
owned, leased or contracted for by the Company, such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Company and its assigns. Consultant and each Representative, as applicable,
shall promptly disclose to the Company (or any persons designated by it) each
such Development, and Consultant and each Representative hereby assigns any
rights it may have or acquire in the Developments and the benefits and/or
rights resulting therefrom to the Company and its assigns without further
compensation and shall communicate, without cost or delay, and without
publishing the same, all available information relating thereto (with all
necessary plans and models) to the Company. 
To the fullest extent permitted by law, such Developments shall be
deemed works made for hire.  Consultant
and each Representative shall, at the request of the Company but at no expense
to Consultant or either Representative, at any time during or after the
Consulting Period, sign all instruments and documents reasonably requested by
the Company and otherwise cooperate with the Company to protect its rights to
any and all such Developments, including, without limitation, applying for,
obtaining and enforcing patents, copyrights or analogous protections thereon in
such countries throughout the world as the Company shall determine.  In the event the Company is unable, after
reasonable effort, to secure the signature of an authorized party for
Consultant or either Representative on any document reasonably necessary or
appropriate for any of the foregoing purposes, for any reason whatsoever,
Consultant and each Representative hereby irrevocably designates and appoints
the Company and its duly authorized officers and agents as Consultant’s and
each Representative’s agent and attorney-in-fact, to act on its behalf to
execute and file any such document and to do all other lawfully permitted acts
to further the prosecution and issuance of any such patent, copyright and other
analogous protection with the same legal force and effect as if executed by
Consultant or such  Representative, as
applicable.

9.             Independent
Contractor; Limitations on Authority. 
In the performance of the duties and obligations imposed under this
Consulting Agreement, it is mutually understood and agreed that Consultant and
each Representative are at all times acting and performing as independent
contractors.  It is agreed by the parties
hereto that no act or inaction of Consultant shall be construed to create a
joint venture, partnership, agency, or employee/employer relationship between
the parties for any purpose.  Consultant
shall have no authority to bind the Company by or to any obligation, agreement,
promise or representation without first obtaining the Company’s prior written
approval.

10.           Right
of Setoff.  Notwithstanding any provision
hereof to the contrary, the Company and InfoLogix-DDMS, Inc. shall be entitled
to set-off amounts due from either of them to the Shareholders under this
Consulting Agreement against any amounts due to the Company and InfoLogix-DDMS,
Inc. from the Shareholders under the

 5
 

Merger Agreement, whether by reason of
indemnification under Article VII of the Merger Agreement or otherwise.  Any set off shall be applied against amounts
payable to the Shareholders in the chronological order all amounts of every kind
payable to the Shareholders are due until the set off is complete.

11.           Taxes.  Consultants will assume full responsibility
for payment of federal, state and local taxes, contributions required under
Social Security and any other taxes imposed with respect to their receipt of
compensation hereunder.  Consultants
agree to fully indemnify and hold the Company harmless with respect to any
claims, assessments, suits, expenses (including, but not limited to reasonable
attorneys’ fees) damages, settlements or losses incurred by or threatened
against the Company which arise as a result of any taxing authority alleging
liability on the part of the Company for any such taxes.

12.           Expenses.  The Company shall reimburse Consultant and
the Representatives for any expenses incurred by them in connection with the
provision of the Services hereunder so long as such expenses have been
preapproved by the Company in writing.

13.Entire Agreement. This instrument
contains the entire agreement of the parties with respect to the subject matter
hereof. Any other oral or written agreements entered into with respect hereto
are hereby revoked and superseded by this Consulting Agreement.  Notwithstanding the foregoing, if the terms
of the Consulting Agreement are found to conflict with the terms of the Merger
Agreement, the terms of the Merger Agreement shall control.

14.           Existing
Agreements.  Consultant represents to
the Company that it is not subject or a party to any consulting agreement,
non-competition covenant or other agreement, covenant or understanding or any
other obligation which might prohibit it from executing this Consulting
Agreement or limit its ability to fulfill his responsibilities hereunder.

15.           Paragraph
Headings. The paragraph headings of this Consulting Agreement are for
convenience of reference only and shall not limit or define the text thereof or
affect its interpretation.

16.           Severability.
In the event that any one or more of the provisions of this Consulting
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected thereby.

17.           Notices.  All notices and other communications which
are required or permitted hereunder shall be in writing and shall be sufficient
if hand delivered or mailed by registered or certified mail, postage prepaid to
the following addresses:

If to Consultant or the
Representatives:

LM
Consulting LLC

102
Surrey Lane

Ponte
Vedra Beach, FL 32082

Attn:  Mark Niemiec

and

Louis
Heidelberger

357
Spring Mill Road

Villanova, PA 19085

 6
 

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

Reed Smith LLP

2500 One Liberty Place

1650 Market Street

Philadelphia, PA 19103

Attention:  Vincent S. Capone

Facsimile:  (215) 851-1420

If to the Company:

InfoLogix,
Inc.

101 E. County Line Road

Hatboro, PA 19040

Attention:  David T. Gulian

Facsimile:  (215) 604-0695

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

Drinker Biddle & Reath LLP

One Logan Square

18th and Cherry Streets

Philadelphia, PA  19103

Attention:  Stephen T. Burdumy

Facsimile:  (215) 988-2757

or such other address as any party hereto shall have
specified by notice in writing to the other party hereto. All such notices and
communications shall be deemed to have been received on the date of delivery
thereof or the third business day after the mailing thereof, whichever is
earlier.

18.           Amendments
and Waivers. This Consulting Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party against
whom enforcement or any such modification or amendment is sought.  Either party hereto may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Consulting Agreement on the part of such other party hereto to be performed or
complied with. The waiver by any party hereto of a breach of any term or
provision of this Consulting Agreement shall not be construed as a waiver of
any subsequent or other breach, whether or not similar to the breach waived.

19.           Counterparts.
This Consulting Agreement may be executed in one or more counterparts and all
such counterparts so executed shall constitute an original agreement, binding
on all the parties but together shall constitute but one and the same instrument.

20.           Successors;
Assignment. This Consulting Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective successors,
assigns, and legal representatives. 
Consultant may not assign Consultants’ rights or interests in this
Consulting Agreement, without the prior written consent of the Company, and any
purported assignment by Consultants in violation hereof shall be null and
void.  Neither Representative shall
transfer his membership interests in the Consultant other than (i) to the other
Representative or (ii) by gift, will or intestate succession to his immediate
family or a trust or limited partnership the beneficiaries or partners of which
are exclusively the Representative or his immediate family; provided, however,
that in any such case it shall be a condition to such transfer that the
transferee acknowledge that it is receiving and holding the membership
interests subject to the

 7
 

provisions of this Section 20, and
there shall be no further transfer of such interests, except in accordance with
this Section 20.

21.           Governing
Law. This Consulting Agreement shall be construed and governed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to the conflicts of laws principles thereof.

22.           Consent to
Jurisdiction.  Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any state
or Federal court located in the Commonwealth of Pennsylvania in the event any
dispute arises out of this Consulting Agreement or any of the transactions
contemplated by this Consulting Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (c) agrees that it will not bring any action
relating to this Consulting Agreement or any of the transactions contemplated
by this Consulting Agreement in any court other than a Federal court sitting in
the Commonwealth of Pennsylvania.

23.           Further
Assurances.  Each of the parties
hereto shall execute such further instruments and take such other actions as
any other party shall reasonably request in order to effectuate the purposes of
this Consulting Agreement.

 8
 

 

IN WITNESS WHEREOF,
Consultant and the Company have executed this Consulting Agreement on the date
first above set forth.

	
   

  	
  The Company:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INFOLOGIX, INC.,
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Consultant:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LM Consulting
  LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Representatives:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Louis
  Heidelberger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mark Niemiec

  
					

 

[Signature page to
the Consulting Agreement]

 

 9

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