ASSET PURCHASE AGREEMENT
BY AND BETWEEN
Shuttle data systems Corp.,
d/b/a ADIA INFORMATION MANAGEMENT CORP.
XXXXXX XXXXXX, XX.
NETSMART TECHNOLOGIES, INC.
AND
Creative socio-medics CORP.
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of June___, 2003, by and among Netsmart Technologies, Inc., a Delaware
corporation (the "Parent"), Creative Socio-Medics Corp., a Delaware corporation
(the "Purchaser"), Shuttle Data Systems Corp., a Michigan corporation, d/b/a
Adia Information Management Corp. (the "Seller"), and Xxxxxx Xxxxxx, Xx.
("Xxxxxx"), President and majority shareholder of the Seller. The Purchaser,
the Parent, the Seller and Xxxxxx are referred as the "Parties". Unless
otherwise indicated, capitalized terms used but not defined are defined in
Paragraph 10.1.
WHEREAS, a division of Seller (the "Division") is engaged in the business
of operating an internet-based service network which provides the Users with
access to the CareNet software network and other public health software (the
"Business");
WHEREAS, the Purchaser is a wholly owned subsidiary of Parent;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, substantially all of Seller's assets used in
connection with the Division and the Business, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of the Assets. On the Closing Date (defined in
Section 2.1 below), Seller shall transfer, sell and assign to Purchaser, and
Purchaser shall purchase from Seller, on the terms and subject to the conditions
set forth in this Agreement, the specific assets used by the Division in
connection with or related to the Business, whether known or unknown,
tangible or intangible, real or personal, wherever situated, owned by Seller or
in which Seller has any right, title or interest (all such assets and properties
are collectively referred to in this Agreement as the "Purchased Assets"),
other than the Excluded Assets (defined in Section 1.2 below), free and clear of
all Encumbrances other than the Liens (defined below) and Permitted
Encumbrances. The Purchased Assets include, without limitation, the following:
(a) All patents, patent applications, trademarks, trademark
applications and registrations, trade names, service marks, service names,
copyrights, copyright applications and registrations, commercial and technical
trade secrets, engineering, production and other designs, drawings,
specifications, formulae, technology, computer and electronic data processing
programs and software, inventions, processes, know-how, confidential information
and other proprietary property rights and interests used in connection with
the operation of or related to the Business owned, developed and licensed by
Seller or used by the Division to service the Users, and the name "CareNet"
and any derivation of such name (the "Division's Intellectual Property"). A
complete list of the Division's Intellectual Property is set forth on the
attached Schedule 1.1(a);
(b) All agreements entered into by Seller under which Seller has
agreed to (i) provide access to the CareNet system software via its internet-
based network (the "CareNet Network"); (ii) maintain and support the
Division's Intellectual Property; and (iii) provide telephone assistance
to the users of the CareNet Network (items (i)-(iii) are collectively referred
to as the "Service Agreements"). A complete list of the Service Agreements is
set forth on the attached Schedule 1.1(b);
(c) [Intentionally Omitted];
(d) The public health contracts listed on the attached
Schedule 1.1(d) (the "Public Health Contracts," and together with the Service
Agreements, the "Assumed Contracts");
(e) The computer servers and other equipment listed on the
attached Schedule 1.1(e) (the "Equipment");
(f) All tangible and intangible assets of the Division and, to
the extent used exclusively with respect to the Purchased Assets, all
apparatus, computers, tapes and the Division's other tangible forms of media,
electronic data processing equipment, fixtures, machinery, and equipment,
including without limitation those listed on Schedule 1.1(f)
(the "Other Assets");
(g) The goodwill associated with the Business; and
(h) All third party warranties and claims under warranties
relating to the Business or the Purchased Assets.
1.2. Excluded Assets. The Purchased Assets are the only assets,
properties and rights being conveyed to Purchaser. Seller is not selling and
Purchaser is not purchasing any assets of Seller, or the Division, other than
the Purchased Assets (collectively, the "Excluded Assets").
1.3. Assumed Liabilities. On the Closing Date, Purchaser shall assume
and agree to discharge or perform all liabilities, obligations and
commitments of the Seller arising under the Assumed Contracts to the extent
arising, or resulting from events or conditions occurring after the Closing Date
(collectively, the "Assumed Liabilities").
1.4. Excluded Liabilities. On the Closing Date, Purchaser shall not become
liable for any and all debts, liabilities or obligations of Seller, regardless
of their type or nature, whether related to or incurred in connection with the
Division, the Business or otherwise, other than the Assumed Liabilities
(collectively, the "Excluded Liabilities").
1.5. Transfer of User Assets and Assumed Contracts. At the Closing, Seller
shall use its commercially reasonable best efforts to transfer to the care,
custody and control of Purchaser all of the User Assets as set forth on Schedule
1.5. To the extent that at the Closing Seller does not deliver the requisite
consent and approval of any owner of a User Asset or counterparty under any
Assumed Contract, Seller further agrees to use its commercially reasonable best
efforts to obtain the consent and approval of the respective owners of the User
Assets or counterparty under any Assumed Contract to the transfer.
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If such consent is not obtained with respect to any such Assumed Contract,
then Seller and Purchaser shall cooperate in an arrangement reasonably
satisfactory to Purchaser under which Purchaser would obtain, to the extent
practicable, the claims, rights and benefits and assume the corresponding
obligations thereunder in accordance with this Agreement, including
subcontracting, sub-licensing or sub-leasing to Purchaser, or under which Seller
would enforce for the benefit of Purchaser, with Purchaser assuming Seller's
obligations, any and all claims, rights and benefits of Seller against a
third party thereto. Seller will promptly pay to Purchaser all monies
received by Seller under any User Asset or any claim, right or benefit arising
thereunder not transferred to Purchaser in accordance with the terms hereof.
1.6. The Purchase Price. For and in consideration of the Purchased
Assets, the representations, warranties, covenants and other agreements of
Seller contained in this Agreement, at the Closing Purchaser shall:
(a) Make a cash payment to Seller in the amount of $900,000.00 less
the Pre-Billed Amount; (the "Cash Payment");
(b) Deliver a promissory note to Seller in the original principal
amount of $500,000.00 (the "Note"), in substantially the form attached to this
Agreement as Exhibit A;
(c) Cause Parent to issue 100,000 shares of its common stock (the
"Shares") to Seller. The issuance of the Shares shall not be registered
under any state or federal securities laws and shall be subject to a
Registration Rights and Restriction Agreement between Seller and Parent
pursuant to which Parent will agree to provide Seller with certain registration
rights with respect to the Shares and Seller will accept certain conditions with
respect to the Sale of the Shares (the "Registration Rights Agreement"), in
substantially the form attached to this Agreement as Exhibit B. (The payments
and deliveries contained in Sections 1.6(a)-(c) are collectively referred to as
the "Purchase Price").
1.7. Purchase Price Allocation. The aggregate consideration paid by
Purchaser to Seller pursuant to this Agreement shall be allocated among the
Purchased Assets and the Non-Compete, including any intangible assets, as
Seller and Purchaser shall agree upon in writing prior to or at Closing. The
allocation of such aggregate consideration will be bargained and negotiated
for, and each party agrees to report the transactions contemplated by this
Agreement for federal income tax and all other Tax purposes (including, but not
limited to, for purposes of Section 1060 of the Code) in a manner consistent
with the agreed upon allocation and in accordance with all applicable rules and
regulations, and to take no position inconsistent with such allocation in any
administrative or judicial examination or other proceeding. Each of Purchaser
and Seller shall timely file the appropriate forms in accordance with the
requirements of Section 1060 of the Code.
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ARTICLE II
THE CLOSING
2.1. The Closing. The closing of the transaction contemplated hereby (the
"Closing") shall take place at the offices of Parent at 000 Xxxxxx Xxxxxx,
Xxxxx, Xxx Xxxx, 00000, or at such other place as may be mutually agreeable
to each of the Parties, concurrently with the execution of this Agreement
(the "Closing Date"). The Closing shall be effective as of 12:01 a.m. on the
day immediately following the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND XXXXXX
The Seller and Xxxxxx hereby, jointly and severally, represent and
warrant to the Purchaser and to the Parent as of the date of this Agreement as
follows:
3.1. Corporate Status. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
The Seller has full corporate power and authority to carry on the Business as
such business is now being conducted and to own the properties and assets it now
owns.
3.2. Authorization, etc. Seller has the requisite corporate power
and authority to execute and deliver this Agreement and the other agreements,
documents, instruments, exhibits, schedules, and certificates of Seller
contemplated hereby (the "Other Seller Documents"), to perform fully its
obligations under this Agreement and the other Seller Agreements, and to
consummate the transactions contemplated hereby and thereby. The Board of
Directors and, if necessary, the shareholders, of Seller have taken all action
required to authorize the execution and delivery of this Agreement and the Other
Seller Documents by Seller, the performance of the obligations of Seller
hereunder and thereunder and the consummation by Seller of the transactions
contemplated hereby and thereby. No other corporate proceedings on the part of
Seller are necessary to authorize the execution and delivery of this Agreement
and the Other Seller Documents by Seller or the performance by Seller of its
obligations hereunder and thereunder. This Agreement constitutes, and the
Other Seller Documents to which Seller is a party, when executed and delivered,
will constitute, legal, valid and binding obligations of the Seller,
enforceable against it in accordance with their terms.
3.3. No Conflicts, etc. The execution, delivery and performance by
the Seller of this Agreement and the Other Seller Documents, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with or result in a violation of or a default under: (a) any
Applicable Law applicable to the Seller or the Purchased Assets; (b) the
articles of incorporation or bylaws or other organizational documents of the
Seller; or (c) except as set forth in Schedule 3.3, which violations or defaults
in each case would not have a material adverse effect on the Purchased Assets,
the User Assets or the operation by the Purchaser of the Business, any
Assumed Contract or other Material Contract, agreement or other instrument
relating to the Business to which the Seller is a party or by which the Seller
is bound.
3.4. Litigation. Except as set forth on Schedule 3.4, there is no
Action pending, or to the Seller's Knowledge threatened, against or relating
to the Seller in connection with the Purchased Assets, the User Assets, the
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Business or transactions contemplated by this Agreement nor does Seller know of
any basis for the commencement of any such Action. Seller
is not in default with respect to any order, writ, injunction or decree of
any court or other governmental department, commission, board, agency or
instrumentality, and there are no such orders, writs, injunctions or decrees in
existence.
3.5. Intellectual Property. Schedule 1.1(a) lists all of the
Division's Intellectual Property used in connection with or related to the
Business as currently conducted. Seller has the complete and unrestricted
right to use and own, has good and marketable title to and has the exclusive
right to assign its entire right, title and interest in and to all of the
Division's Intellectual Property, each of such items is in full force and
effect and such items are the only proprietary property used or necessary in
connection with the Business as presently conducted and the same will be
available for use by the Purchaser following the Closing on the same terms and
conditions as currently used in the Business. Seller has not infringed,
misappropriated or misused any patent, trademark, trade name, copyright (or
application for any of the foregoing), trade secret, know-how or confidential
information or data of any other Person. Seller has never received any claim,
charge, complaint or notice alleging any such interference, infringement,
misappropriation, conflict or violation, including any claim that the Business
must license or refrain from using such rights of a third party. To Seller's
Knowledge, there has been no infringement, misappropriation or misuse of any of
the Division's Intellectual Property. The consummation of the transactions
completed by this Agreement will not result in the loss or impairment of any the
Division's Intellectual Property.
3.6. Purchased Assets. The Purchased Assets constitute all of the
assets used by Seller and the Division in the operation of the Business. The
Equipment and Other Purchased Assets now being used by the Seller in the
Business, whether leased or owned, are in good working order, repair and
operating condition, and have been maintained in accordance with generally
accepted industry practices. Except for the liens of University Bank and the
lessors of the Equipment, as set forth on Schedule 3.6 (the "Liens," and the
holders thereof the "Lienholders"), which Liens shall be discharged at Closing
in accordance with the terms of Section 7.2 hereof, Seller has and will convey
to the Purchaser at Closing good title to the Purchased Assets, free and clear
of any and all Encumbrances other than Permitted Encumbrances.
3.7. Material Contracts. Other than: (a) this Agreement and the
other agreements and documents contemplated hereby, (b) any purchase order for
services in the ordinary course of business; and (c) any other contract,
agreement or commitment that: (i) by its terms, terminates, or may be terminated
by the Seller without penalty within one year of the Closing Date and (ii) is in
an amount less than $7,500.00, Schedule 3.7 hereto lists all of the written
contracts relating to the Business (the "Material Contracts"). Except as set
forth in the Schedule 3.7, no consent of any third party is required under any
Material Contract as a result of or in connection with, and the enforceability
of any Material Contract will not be affected in any manner by, the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby or by the Other Seller Documents, and where
the failure to obtain such consent would have a material adverse effect on the
Purchased Assets, the User Assets or the operation by the Purchaser of the
Business. A true, correct and complete copy of each Material Contract has been
delivered to Purchaser.
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3.8. Compliance with Applicable Laws and Regulations. Seller has
complied in all material respects with all laws, regulations, rules, orders,
judgments, decrees and other requirements imposed by any governmental authority
applicable to it in the operation and ownership of the Business, including all
Environmental Laws, which could result in liability of $10,000 or more. No
notice, warning or information request has been received by the Seller with
respect to any alleged violation or violation by the Seller of any such legal
requirements.
3.9. Permits and Licenses. Seller has obtained all permits, licenses,
franchises and other authorizations necessary with respect to, and has complied
with all laws applicable to, the conduct of the Business, and Seller has not
engaged in any activity which would cause revocation or suspension of any such
permits, licenses, franchises or authorizations. All such permits, licenses,
franchises or authorizations are in full force and effect and no action or
proceeding looking to or contemplating the revocation or suspension of any
such permits, licenses, franchises or authorizations are pending or, to Seller's
knowledge, threatened. A true, correct and complete copy of each permit,
license, franchises and other authorization has been delivered to Purchaser.
3.10. Employees; Labor Matters, etc. Schedule 3.10 contains a
complete and accurate list of all of the Division's current employees, their
respective dates of hire, salaries or hourly rates (as the case may be), annual
bonuses (last paid or payable), if any, unused accrued vacation entitlements,
and a list and total value of any other fringe benefits or incentive
compensation paid or payable. Except as specifically set forth on Schedule
3.10, (a) no employee is subject to an employment agreement and (b) all
employees are actively at work and no employee is currently on a leave of
absence, layoff, suspension, workers compensation, short-term or long-term
disability or otherwise not actively performing his or her work during all
normally scheduled business hours. Schedule 3.10 contains a complete and
accurate list, with respect to Seller and the Business, of each qualified
beneficiary under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), who is either receiving or entitled to elect to receive
continuation coverage pursuant to COBRA, the nature and date of each such COBRA
qualifying event, the amount of the applicable monthly COBRA premium, and the
date as of which the maximum COBRA period is scheduled to end in each case.
Seller has no COBRA liability with respect to any individual other than
individuals identified on Schedule 3.10.
3.11. Employee Benefit Plans. Schedule 3.11 lists each pension,
retirement, profit-sharing, deferred compensation, bonus or other incentive
plan, or other employee benefit program, arrangement, agreement or
understanding, or medical, vision, dental or other health plan, or life
insurance or disability plan, or any other employee benefit plan, whether
or not terminated and whether or not funded, including, without limitation,
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
Seller or any ERISA Affiliate contributes or is a party or is bound or under
which it has or may have liability ("Employee Benefit Plans"). For purposes
of this Agreement an "ERISA Affiliate" of the Seller means any corporation or
unincorporated trade or business (including, without limitation, any
partnership, limited liability company or sole proprietorship) that, together
with the Seller, is considered a single employer within the meaning of Code
Section 414(b), (c), (m), (n) or (o). None of the Employee Benefit Plans is
a/an, and the Seller does not otherwise have any liability with respect to any,
(i) employee benefit plan that is subject to Title IV of ERISA or is otherwise
subject to the minimum funding requirements of ERISA or the Code; (ii)
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multiemployer plan as defined in Section 3(37) of ERISA; (iii) multiple-employer
plan within the meaning of Section 413 of the Code; or (iv) employee benefit
plan that provides health, life, disability or other welfare-type benefits to
current or future retirees or current or future former employees except as
required by COBRA or applicable state continuation coverage law. The Seller has
made available to the Purchaser and the Parent true, correct and complete
copies of all Employee Benefit Plans and all material documents pursuant to
which such plans are maintained, administered and funded. Each Employee
Benefit Plan has been maintained, administered and funded in compliance in all
material respects with all applicable laws, including, without limitation, ERISA
and the Code. There are no claims, suits, investigations or audits pending or
threatened with respect to any of the Employee Benefit Plans (other than
routine, undisputed benefit claims), no breaches or allegations of breach of
fiduciary responsibility and no prohibited transactions have occurred with
respect to any Employee Benefit Plan. No Employee Benefit Plan has any material
unfunded liabilities.
3.12. Tax Matters. Except as set forth on the attached Schedule 3.12:
(a) The Seller has filed all Tax Returns with respect
to the Division and the Business which it is required to file under
applicable laws and regulations, and all such Tax Returns are complete and
correct and have been prepared in compliance with all applicable laws and
regulations.
(b) Seller has paid all Taxes with respect to the
Division and the Business due and owing by it (whether or not such Taxes are
required to be shown on a Tax Return) and has withheld and paid over to the
appropriate taxing authority all Taxes which it is required to withhold from
amounts paid or owing to any employee, shareholder, creditor or other third
party.
(c) Seller has not waived any statute of limitations
with respect to any Taxes or agreed to any extension of time with respect to
any Tax assessment or deficiency with respect to the Division or the Business.
(d) Since March 31, 2003, Seller has not incurred any
liability for Taxes with respect to the Division or the Business other than in
the ordinary course.
(e) No foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted with
respect to Seller with respect to the Division or the Business.
(f) Seller has not received from any foreign, federal,
state or local taxing authority any written notice indicating an intent to open
an audit or other review with respect to the Division or the Business.
(g) To Seller's knowledge there is no basis for any
authority to assess any additional Taxes with respect to the Business for
any period for which Tax returns have been filed. There is no dispute, audit,
investigation, proceeding or claim concerning any liability with respect to
Taxes of the Seller in connection with the Business either (i) claimed or raised
by any authority in writing or (ii) to the Knowledge of Seller, threatened
based upon contact with any such authority. The Seller is not a party to any
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action, proceeding, audit, investigation or inquiry by any government authority
relating to Taxes, nor to the Knowledge of Seller is there any basis for the
same, relating to Taxes, which could result in a liability to the Buyer.
3.13. Assumed Contracts. Except as set forth on Schedule 3.13,
which in any event would not have a material adverse effect on the Business,
each Assumed Contract is legal, valid, binding and enforceable against Seller
in accordance with its terms, except to the extent such enforceability may be
limited by applicable bankruptcy or other laws affecting creditors' rights,
or by general equity principles, and is in full force and effect on the date
hereof. Such Assumed Contracts are fully performable by Seller in accordance
with their terms and Seller has performed all obligations required to be
performed by it to date under, and is not in default in respect of, any such
Assumed Contract, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default, except where such default would
not have a material adverse effect on the Business. To Seller's knowledge, no
other party to any such Assumed Contract is in default in respect thereof and no
event has occurred which, with due notice of lapse of time or both, would
constitute such a default, except where such a default would not have a
material adverse effect on the Business, and otherwise there are no
grounds for the termination or cancellation of such Contract by the Seller.
No other party to an Assumed Contract has notified Seller that it intends to
terminate or fail to renew any such Assumed Contract. Except as set forth in
Section 3.13, which failure to obtain such consent would not have a material
adverse effect on the Business, the Assumed Contracts included in the Purchased
Assets are assignable to Purchaser without the required consent of any other
Person.
3.14. No Undisclosed Liabilities. Except as and to the extent set
forth on the attached Schedule 3.14 or reflected in the Financial Statements,
and except for current liabilities incurred by Seller directly in connection
with the operation of the Division in the ordinary course since March 31,
2003, and the Assumed Liabilities, Seller has no material debts, liabilities
or obligations of any nature or kind (whether absolute, accrued, contingent,
unliquidated or otherwise, whether or not known to Seller, whether due or to
become due and regardless of when asserted) arising out of transactions entered
into, at or prior to the Closing, or any action or inaction at or prior to the
Closing or any state of facts existing at or prior to the Closing and which
could affect, in any material way, the Division, the Business or the Purchased
Assets. Except as set forth on the attached Schedule 3.14, Seller has no
knowledge of any existing, proposed or threatened change that could have a
material adverse impact on the Division or the Business or the future prospects
of the Division or the Business.
3.15. Share Acquisition. Seller is acquiring the Shares for its
own account, for investment only, and not for the interest of any other, and
not with the intention of, or a view toward, the resale, transfer or further
distribution in violation of the Securities Act of 1933 (the "Act"). The
Shares were not offered to Seller by means of: (a) an advertisement, article,
notice, letter, circular or other communication published in any newspaper,
magazine or similar medium or by other written communication or broadcast over
television or radio; or (b) a seminar or meeting held pursuant to public
invitation or announcement; or (c) any other form of general solicitation or
advertising. Seller is an "accredited investor" as defined in ss2(15) of the
Act and in Rule 501(a) promulgated under the Act. Seller can bear the economic
risk (including loss of the entire investment) of the investment in Parent for
an indefinite period of time without impairing its ability to provide for
Seller in the same manner as that prior to acquiring the Shares. Seller,
either alone or with its advisors, has such knowledge and experience in
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financial and business matters that it is capable of evaluating the merits and
risks of this investment. Seller has reviewed the Parent's SEC Reports.
Seller has adequate means of providing for its current needs and contingencies
and has no need for liquidity in this investment in Parent. Seller has relied,
if at all, solely upon the advice of personal advisors with respect to the tax
and other aspects of an investment in Parent and has not received or relied
upon any representations, warranties or assurances of Parent, Purchaser or
any of their representatives relating to the tax and other aspects of an
investment in Parent. Seller understands that the Shares have not been
registered under the Act, nor under any U.S. or foreign state or other blue sky
or securities laws, and the Shares cannot be sold or otherwise transferred
except pursuant to an effective registration or under such laws or in reliance
upon an exemption therefrom. Seller acknowledges that a restrictive legend
will be placed on the certificate evidencing the Shares to the effect that the
Shares have not been registered and may not be sold or otherwise transferred
until registered or in reliance upon an exemption.
3.16. Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority is required to be made or obtained
by the Seller in connection with the execution or delivery by the Seller of this
Agreement or any of the Other Sale Documents, the performance by the Seller of
its obligations thereunder or the consummation by the Seller of the
transactions contemplated hereby or thereby.
3.17 No Untrue Statement. No representation or warranty made by
Seller in this Agreement, nor any statement, certificate, exhibit, schedule
or list furnished by Seller to Parent, or Purchaser pursuant hereto or in
connection herewith and referred to herein, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
3.18. Brokers, Finders, etc. Other than any obligation to pay a fee
to Xxxxxx Xxxxxxxx and/or Lord Amherst Advisors, which fee will be paid by
Seller or Xxxxxx, all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the participation
of any Person acting on behalf of the Seller in such manner as to give rise to
any valid claim against the Purchaser for any brokerage or finder's commission,
fee or similar compensation, including without limitation any fees to Xxxxxxx
Xxxxx & Associates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND PARENT
The Purchaser and Parent, jointly and severally, represent and warrant
to the Seller as of the date of this Agreement as follows:
4.1. Corporate Status. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
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4.2. Authorization, etc. The Purchaser and Parent have the
requisite corporate power and authority to execute and deliver this Agreement,
to perform fully their respective obligations under this Agreement, and to
consummate the transactions contemplated hereby. The execution and delivery by
the Purchaser and Parent of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by all requisite
corporate action of the Purchaser and Parent. This Agreement is a legal, valid
and binding obligation of the Purchaser and Parent, enforceable against them
in accordance with its terms.
4.3. No Conflicts, etc. The execution, delivery and performance by
the Purchaser and Parent of this Agreement and the Other Seller Documents, and
the consummation of the transactions contemplated hereby and thereby, do not
and will not conflict with or result in a violation of or a default under
(with or without the giving of notice or the lapse of time or both): (a) any
Applicable Law applicable to the Purchaser or Parent, (b) the certificate of
incorporation or by-laws or other organizational documents of the Purchaser
and Parent or (c) any material contract, agreement or other instrument to which
the Purchaser and Parent are parties or by which the Purchaser or Parent are
bound.
4.4. Litigation. There is no Action pending, or to the Purchaser
or Parent's Knowledge threatened, against or relating to the Purchaser or
Parent or relating to the transactions contemplated by this Agreement or except
as disclosed in the Parent's SEC Reports that would have a material adverse
effect on the Purchaser's ability to satisfy the Assumed Liabilities.
4.5. Validity of the Shares. The Shares, when issued, and delivered
in accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable and will be free and clear of any liens,
encumbrances or restrictions of any kind; provided, however, that the Shares
may be subject to restrictions on transfer under state and federal securities
laws and the Registration Rights Agreement.
4.6. Securities Act Registration. Assuming that the representations
and warranties of the Seller contained herein are true, the issuance of the
Shares in the manner contemplated by this Agreement is exempt from registration
under the Act and is exempt or will be exempt under applicable state securities
or blue sky laws regulating the sale of securities.
4.7. Available Funds. The Purchaser has funds available to satisfy
the Assumed Liabilities in accordance with their terms.
4.8. No Untrue Statement. No representation or warranty made by
Purchaser or Parent in this Agreement, nor any statement, certificate, exhibit,
schedule or list furnished by Purchaser or Parent to Seller pursuant hereto or
in connection herewith and referred to herein, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading.
4.9. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transaction contemplated hereby, have been carried on without
the participation of any Person acting on behalf of the Purchaser in such
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manner as to give rise to any valid claim against the Seller for any brokerage
or finder's commission, fee or similar compensation.
ARTICLE V
OTHER COVENANTS AND AGREEMENTS
5.1. Employees' Continued Employment. Nothing contained in this
Agreement shall obligate Purchaser or Parent to employ any employees of the
Division. Nothing contained in this Agreement shall confer upon any employee
of the Division any right to continued employment after the Closing Date.
5.2. Full Access. If, following the Closing Date, it is necessary
that Purchaser or Seller obtain additional information relating to the Business
for the period prior to the Closing Date in order to properly prepare documents
or reports required to be filed with Governmental Authorities or financial
statements, and such information is within the other party's possession,
Purchaser or Seller, as applicable, will (at the requesting party's sole
reasonable cost and expense) furnish or cause its representatives to furnish
such information to the other party. Such information shall include, without
limitation, all agreements between Seller and any Person relating to the
Business.
5.3. Transfer Tax. Seller has complied with the requirements of any
state, city or local law, statute, ordinance, regulation or otherwise in any
state, city or locality in which any of the Purchased Assets is located, which
law, statute, ordinance or regulation imposes a sales tax, transfer, recording
or gains tax and/or filing requirement in connection with the transfer of the
Purchased Assets ("Transfer Taxes"). Seller shall pay all sums due under the
Transfer Taxes in the manner required by law.
5.4. Financial Statements. Seller has delivered to Purchaser and
Parent audited financial statements for Seller for its fiscal year ended
December 31, 2002, and unaudited financial statements for the three (3) months
ended March 31, 2002 and March 31, 2003 (collectively, the "Financial
Statements"). The Financial Statements: (i) have been prepared by Xxxxx and
Associates, P.C.; (ii) present fairly in all material respects the
financial position of the Company at such dates and the results of operations
and cash flows for the respective periods ended on such dates; and (iii) were
prepared in conformity with GAAP consistently applied, subject, in the case of
interim statements, to the absence of footnotes and normal recurring year end
adjustments. Purchaser and/or Parent shall pay all fees and expenses of Xxxxx
and Associates, P.C. related to the preparation of the Financial Statements in
an amount not to exceed $20,000.00.
5.5. Continuing Employees. On the Closing Date, Seller shall
terminate all of the Division's employees and the Purchaser shall offer
employment to commence immediately on the Closing Date to all employees of the
Seller who are employed immediately prior to the Closing Date and listed on
Schedule 3.10 ("Continuing Employees"), in substantially the same position
held by them prior to the Closing and on terms and conditions that are, to the
extent consistent with the Purchaser's existing employment terms, conditions
and policies, comparable to those enjoyed by such employees prior to the
Closing; provided, that the foregoing shall not limit any specific requirement
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herein as to coverage for Continuing Employees under specific plans or programs
of the Purchaser.
5.6. Health and Welfare Benefits. As of the Closing Date, the
Purchaser shall commence coverage of Continuing Employees under any life
insurance and disability plans, programs and arrangements that it then provides
to its other employees on the same terms and conditions as are made available
to Parent's employees generally. As of the day following the Closing, the
Purchaser shall commence coverage of Continuing Employees under any medical,
hospitalization and dental programs or arrangements that it then provides to
its other employees; provided, that the Purchaser shall, to the extent permitted
by such programs, waive any preexisting conditions exclusion or limitation
otherwise applicable under its medical, hospitalization and dental plans. The
Seller shall retain all liability for claims incurred prior to the Closing Date
under its employee benefit plans and programs, including its medical,
hospitalization and dental plans. The Purchaser shall assume all liability
for claims incurred on or after the Closing Date under its employee benefit
plans and programs, including its medical, hospitalization and dental plans.
For purposes of this Section 5.6, a claim shall be considered incurred at the
time goods or services are rendered in connection with a benefit covered under
the particular plan.
5.7. Discharge of Assumed Liabilities. Purchaser will discharge,
before the same shall become delinquent, the Assumed Liabilities; provided,
however, Purchaser shall not be required to discharge any Assumed Liability
whose applicability or validity is being contested in good faith by
appropriate proceedings and, if required by generally accepted accounting
principles, for which adequate provision has been made.
5.8. Advice of Change. Seller will promptly advise Purchaser in
writing, upon obtaining knowledge, of: any event which occurred on or prior
to the date of execution of this Agreement that is not disclosed herein and
any event which occurs after the date of this Agreement, in each case that
would, under this Agreement or any Exhibit or Schedule delivered pursuant
hereto, have been required to be disclosed on the date of execution of this
Agreement by Seller.
5.9. Expenses. Except as set forth in this Section and Section 5.3
hereof, each of the Seller and the Purchaser will bear their respective
obligations and expenses (including legal fees and expenses) incurred in
connection with this Agreement or arising as a result of the transaction
contemplated by this Agreement. Any and all transfer, documentary, sales, use,
stamp, registration, value-added and other taxes and fees, including any
penalties and interest thereon incurred in connection with this Agreement
(if any) shall be paid by the Purchaser when due.
5.10 Services of Seller. (a) Following the Closing, Seller shall
provide the following services to Purchaser and Parent:
(i) Re-routing phone calls relating to the Business to such number
as may be notified by Purchaser to Seller from time to time;
(ii) Re-routing of e-mails to relating to the Business to such
e-mail address as may be notified by Purchaser to Seller
from time to time; and
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(iii) Providing on Seller's website a link for all inquiries related
to CareNet and the business so that such inquiries are
re-directed to Parent's website or such other website as may be
notified by Purchaser to Seller from time to time.
(b) Seller shall perform the foregoing services with the same
degree of care, skill, confidentiality and diligence with
which such services were provided to and with respect to the
Division and the Business prior to the date of this Agreement.
ARTICLE VI
INDEMNIFICATION
6.1. Indemnification by Purchaser and Parent. Purchaser and
Parent hereby agree, jointly and severally, to indemnify, defend and hold
harmless Seller, Seller's officers, directors, shareholders, employees,
independent contractors, agents, successors and assigns and Xxxxxx
(collectively, the "Seller Parties") from and against any and all Losses (as
hereinafter defined) which any of the Seller Parties actually incur which
are based on, the result of, arise out of or are otherwise related to any of the
following:
(a) any inaccuracy or misrepresentation in, or breach
of any representation or warranty of Purchaser contained in, this Agreement,
any of the Other Sale Documents or any certificate, schedule, exhibit list or
other instrument to be furnished by Purchaser or Parent to Seller pursuant to
this Agreement or any of the Other Sale Documents;
(b) any breach or failure of Purchaser or Parent to
perform any covenant or agreement required to be performed by it pursuant to
this Agreement or any of the Other Sale Documents;
(c) the use and operation of the Purchased Assets and/or
the Business from and after the Closing Date; and
(d) the Assumed Liabilities.
For purposes of this Article 6, the term "Losses" shall mean all
damages, costs and expenses (including reasonable attorneys' and consultants'
fees) of every kind, nature or description, it being the intent of the parties
that the amount of any such Loss shall be the amount necessary to restore
the indemnified party to the position it would have been in (economically
or otherwise), including any costs or expenses incident to such restoration, had
the breach, event, occurrence or condition occasioning such Loss never occurred.
6.2. Indemnification by Seller and Xxxxxx. Seller and Xxxxxx hereby
agree, jointly and severally, to indemnify, defend and hold harmless Purchaser
and Parent and their respective officers, directors, shareholders, managers,
members, employees, independent contractors, agents, successors and assigns
(collectively, the "Purchaser Parties") from and against any and all Losses
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which any of the Purchaser Parties actually incur which are based on, the
result of, arise out of or are otherwise related to any of the following:
(a) any inaccuracy or misrepresentation in, or breach of
any representation or warranty of Seller contained in, this Agreement, any
of the Other Sale Documents or any certificate, schedule, list or other
instrument to be furnished by Seller to Purchaser or Parent pursuant to this
Agreement or any of the Other Sale Documents;
(b) any breach or failure of Seller or to perform any
covenant or agreement required to be performed by Seller pursuant to this
Agreement or any of the Other Sale Documents;
(c) any Excluded Liability, or Seller's failure to
perform, pay and discharge any Excluded Liability prior to or following the
Closing; and
(d) the operation of the Division and the Business by
Seller for the period prior to the Closing.
6.3. Minimization of Indemnities. Each Party shall use
reasonable efforts to minimize the indemnification obligations of the other
Party under this Article 6 by, among other reasonable things and without
limiting the generality of the foregoing, taking such reasonable remedial action
as it believes may minimize such obligation.
6.4. Limitations on Indemnification. Neither Purchaser and Parent on
the one hand nor Seller and Xxxxxx on the other hand shall be liable to the
other for any claim for indemnifiable damages unless the aggregate of all
Losses exceeds Twenty-Five Thousand Dollars ($25,000.00), whereupon such
Party shall be liable for the amount of all Losses incurred by the Party
claiming indemnification (the "Claimant"); provided, however, that the
aggregate amount of monetary damages for which either party shall be liable
under this Agreement with respect to the transactions contemplated hereunder
shall in no event exceed an amount equal to the Purchase Price. Notwithstanding
the foregoing sentence, no Claimant shall be subject to the limitations set
forth in this Section 6.4 in seeking indemnification from an indemnifying
party for (i) fraud, willful or intentional misrepresentations, (ii) Purchaser's
failure to perform, pay and discharge any Assumed Liability following the
Closing, (iii) Seller's failure to pay or discharge the Excluded Liabilities;
and (iv) Seller's breach of the representation and warranties contained in
Section 3.6 hereof.
6.5. Claims for Indemnification. The Parties intend that all
indemnification claims hereunder be made as promptly as practicable by the
Claimant. Whenever any claim arises for indemnification hereunder the Claimant
will promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the case of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings
of a third party (a "Third Party Claim), the notice to the Indemnifying Party
will specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The failure to so notify the Indemnifying Party shall not
constitute a waiver of such claim but a Claimant shall not be entitled to
receive any indemnification with respect to any Loss that occurred as a result
of the failure of the Claimant to give such notice. The Indemnifying Party
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shall have the right (without prejudice to the right of any Claimant to
participate at its expense through counsel of its own choosing) to defend or
prosecute such claim at its expense and through counsel of its own choosing if
it gives written notice of its intention to do so not later than twenty days
following notice thereof of such claim by the Claimant or such shorter time
period as required so that the interests of the Claimant would not be materially
prejudiced as a result of its failure to have received such notice; provided,
however, that if the defendants in any action shall include both an Indemnifying
Party and a Claimant and the Claimant shall have reasonably concluded that
counsel selected by the Indemnifying Party has a conflict of interest because
of the availability of different or additional defenses to the Claimant, the
Claimant shall have the right to select separate counsel to participate in the
defense of such action on its behalf, at the expense of the Indemnifying Party.
If the Indemnifying Party does not so choose to defend or prosecute any such
claim asserted by a third party for which a Claimant would be entitled to
indemnification hereunder, then the Claimant shall be entitled to recover from
the Indemnifying Party, on a monthly basis, all of its attorneys' reasonable
fees and other costs and expenses of litigation of any nature whatsoever
incurred in the defense of such claim. Notwithstanding the assumption of
the defense of any claim by an Indemnifying Party pursuant to this
paragraph, the Claimant shall have the right to approve the terms of any
settlement of a claim (which approval shall not be unreasonably withheld). In
the event that the Indemnifying Party assumes the defense of a Third Party
Claim, the Indemnifying Party shall have the right to dispute and defend such
Third Party Claims and thereafter so defend and pay any adverse final judgment
or award or settlement amount in regard thereto. Except as otherwise provided
herein, the Claimant will not settle or compromise any Third Party Claim for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which will not be unreasonably withheld.
If the Indemnifying Party is of the opinion that the Claimant is not entitled
to indemnification, or is not entitled to indemnification in the amount
claimed in such notice, it will deliver, within twenty (20) business days
after the receipt of such notice, a written objection to such claim and written
specifications in reasonable detail of the aspects or details objected to, and
the grounds for such objection. If timely notice of objection is not delivered
or if a claim by an Claimant is admitted in writing by an Indemnifying Party,
the Claimant, as a non-exclusive remedy, will have the right to set-off the
amount of such claim or award against any amount yet owed, whether due or to
become due, by the Claimant or any subsidiary thereof to any Indemnifying Party
by reason of this Agreement or any agreement or contemplated by this Agreement.
The Indemnifying Party and the Claimant shall cooperate in furnishing evidence
and testimony and in any other manner which the other may reasonably request,
and shall in all other respects have an obligation of good faith dealing, one
to the other, so as not to unreasonably expose the other to an undue risk of
loss. The Claimant shall be entitled to reimbursement for out-of-pocket expenses
reasonably incurred by it in connection with such cooperation. Except for fees
and expenses for which indemnification is provided pursuant to Section 6.1 or
Section 6.2, as the case may be, and as provided in the preceding sentence,
each party shall bear its own fees and expenses incurred pursuant to this
paragraph 6.5.
ARTICLE VII
CLOSING DELIVERIES
7.1. Seller's Deliveries. At the Closing, Seller shall deliver or
cause to be delivered to Parent and/or Purchaser the following:
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(a) Good and marketable title to the Purchased Assets
free and clear of any and all Encumbrances other than the Liens to be discharged
at Closing and the Permitted Encumbrances;
(b) A Warranty Xxxx of Sale, in substantially the form
attached to this Agreement as Exhibit C;
(c) Forms UUC-3 or such other termination statements
terminating the Liens upon payment to the Lienholders of the amounts set forth
on Schedule 3.6 hereto or authorization by the Lienholders to Purchaser,
Parent or their designees to file of such termination statements upon the
payment of such amounts;
(d) The Registration Rights Agreement;
(e) The non-compete agreements between each of Seller,
Xxxxxx and Lindbert and Purchaser and parent substantially in the form attached
to this Agreement as Exhibit D, pursuant to which Seller, Xxxxxx and Xxxxxxxx
shall agree not to compete with Purchaser in the conduct of the Business after
the Closing Date (the "Non-Compete");
(f) The release by the officers, directors and
employees of Seller (the "Releasing Parties") substantially in the form
attached to this Agreement as Exhibit E (the "Release"), pursuant to which the
Releasing Parties shall agree to release any and all claims against Purchaser
and Parent with respect to any amounts owing to them by Seller;
(g) The license agreement between Purchaser and Seller
for Seller's Managepoint software substantially in the form attached to this
Agreement as Exhibit F (the "License Agreement");
(h) The employment agreement with Xxxxxxxx Xxxxxxxx, a
current employee of Seller substantially in the form attached to this Agreement
as Exhibit G (the "Employment Agreement");
(i) The consulting agreement between Xxxxxx and Purchaser
substantially in the form attached to this Agreement as Exhibit H (the
"Consulting Agreement");
(j) The sublease between Seller and Purchaser
substantially in the form attached to this Agreement as Exhibit I (the "Lease");
(k) A certificate signed by Seller's President setting
forth the Pre-Billed Amount;
(l) Certified copies of the resolutions by which the
corporate action on the part of Seller and the Division necessary to approve
this Agreement and the transactions contemplated hereby were taken;
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(m) Incumbency certificates signed by a duly authorized
officer of Seller certifying the signature and office of each officer executing
this Agreement or any other agreement, certificate or other instrument executed
pursuant hereto;
(n) Long form good standing certificates of Seller issued
by the Michigan Department of Consumer and Industry Services and any
jurisdiction in which either of them is qualified to do business, each dated
as of a date within seven (7) days prior to the Closing Date;
(o) The articles of incorporation of Seller, certified
as of a date no more than seven (7) days prior to the Closing Date by the
Michigan Department of Consumer and Industry Services, and the bylaws of
Seller, certified by its Secretary;
(p) The opinion of Jaffe, Raitt, Heuer & Xxxxx, P.C.,
counsel to Seller; and
(q) Such other documents or instruments as the Purchaser
or Parent may reasonably request to effect the transactions contemplated by this
Agreement.
7.2. Purchaser's and Parent's Deliveries. At the Closing,
Purchaser and Parent shall deliver or cause to be delivered to Seller the
following:
(a) The Purchase Price, the Cash Payment portion of which
shall be paid:
(i) [$99,547.00] to University Bank;
(ii) $24,054.00 to De Xxxx Xxxxxx Operational
Services, LLC; and
(iii) the balance of the Cash Payment to the Seller;
(b) A payment to Xxxxx and Associates, P.C., in the
amount of $20,000.00;
(c) The Registration Rights Agreement;
(d) The Non-Compete;
(e) The License Agreement;
(f) The Employment Agreement;
(g) The Consulting Agreement;
(h) The Lease;
(i) Certified copies of the resolutions by which the
corporate action on the part of Purchaser and Parent necessary to approve this
Agreement and the transactions contemplated hereby were taken;
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(j) Incumbency certificates signed by a duly authorized
officer of Purchaser and Parent certifying the signature and office of each
officer executing this Agreement or any other agreement, certificate or other
instrument executed pursuant hereto;
(k) Long form good standing certificates of Purchaser
and Parent issued by the Delaware Secretary of State and any jurisdiction in
which either of them is qualified to do business other than any jurisdiction
where the failure to be so qualified would not have a material adverse effect
on Parent and its subsidiaries, taken as a whole. Each dated as of a date
within seven (7) days prior to the Closing Date;
(l) The articles of incorporation of Purchaser and
Parent, certified as of a date no more than seven (7) days prior to the Closing
Date by the Delaware Secretary of State, and the bylaws of Purchaser and Parent,
certified by their respective Secretaries;
(m) The opinion of Kramer, Coleman, Wactlar & Xxxxxxxxx,
P.C., counsel to Purchaser; and
(n) Such other documents or instruments as Seller may
reasonably request to effect the transactions contemplated by this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1. [Intentionally Omitted]
8.2. Severability. If any covenant, agreement, provision or term
of this Agreement is held to be invalid for any reason whatsoever, then such
covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of any other provision
of this Agreement.
8.3. Notices. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (i) delivered
personally, (ii) sent by registered or certified mail, return receipt requested,
postage prepaid or (iii) sent by next-day or overnight mail or delivery to the
applicable address set forth below.
If to Purchaser: Copy to:
Creative Socio-Medics, Inc. Kramer, Coleman, Wactlar & Xxxxxxxxx, P.C.
Attn: Xxxxx Xxxxxx Attn: Xxxxx X. Xxxxxxxxx, Esq.
000 Xxxxxx Xxxxxx 000 Xxxxxxx Xxxxxxxxxx
Xxxxx, XX 00000 Xxxxxxx, XX 00000
Fax: (000) 000-0000
If to Parent: Copy to:
Netsmart Technologies, Inc. Kramer, Coleman, Wactlar & Xxxxxxxxx, P.C.
Attn: Xxxxx Xxxxxx Attn: Xxxxx X. Xxxxxxxxx, Esq.
000 Xxxxxx Xxxxxx 000 Xxxxxxx Xxxxxxxxxx
Xxxxx, XX 00000 Xxxxxxx, XX 00000
Fax: (000) 000-0000
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If to Seller: Copy to:
Shuttle Data Systems Corp. Jaffe, Raitt, Heuer & Xxxxx, P.C.
d/b/a Adia Information Management Corp. Attn: Mr. Xxxxx Sugar, Esq.
Attn: Xx. Xxxxxx Xxxxxx, Xx., President One Xxxxxxxx Ave, Suite 2400
000 X. Xxxxx, Xxxxx 000 Xxxxxxx, XX 00000
Xxx Xxxxx, XX 00000 Fax: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other Party.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (i) if by personal delivery, on the date after
such delivery, (ii) if by certified or registered mail, on the seventh
business day after the mailing thereof or (iii) if by next-day or overnight mail
or delivery, on the day delivered, provided, however, an additional copy is
also sent by telecopy (with confirmation of receipt).
8.4. Entire Agreement. This Agreement, the schedules and exhibits
attached to this Agreement, and the Other Sale Documents constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the Parties with respect to the subject matter hereof.
8.5. Counterparts. The Parties may execute this Agreement in
separate counterparts, each of which shall be deemed an original and all of
which together will constitute one and the same instrument.
8.6. Governing Law, etc. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to its conflict of principles.
8.7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.
8.8. Assignment. This Agreement shall not be assignable or
otherwise transferable by any Party hereto without the prior written consent of
the other Party.
8.9. No Third Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person or entity other than the Parties and
their respective successors and permitted assigns.
8.10. Press Releases and Public Announcements. Neither Seller nor
Xxxxxx shall issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing without the prior
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written approval of Parent (such approval not to be unreasonably withheld),
except as required by applicable law. The Parties shall jointly prepare any
press release or other public announcement to be issued upon the execution of
this Agreement and/or at Closing.
8.11. Amendment, Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the Party against whom
enforcement of the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of the
Party granting such waiver in any other respect or at any other time.
Neither the waiver by either of the Parties of a breach of or a default under
any of the provisions of this Agreement, nor the failure by either of the
Parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed
as a waiver of any other breach or default of a similar nature, or as a waiver
of any of such provisions, rights or privileges hereunder.
8.12. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and will not be deemed to limit, characterize or in any way affect the meaning
or interpretation of any provision of this Agreement, and all provisions of
this Agreement will be enforced and construed as if no caption had been used
in this Agreement.
8.13. No Strict Construction; Interpretation. The language
used in this Agreement will be deemed to be the language chosen by the
Parties to express their mutual intent and no rule of strict construction will
be applied against any Person.
8.14. Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated by reference and made
a part of this Agreement
ARTICLE IX
DEFINITIONS
9.1. Definition of Certain Terms. The terms defined in this
Section 10.1, whenever used in this Agreement (including in the schedules
and exhibits), shall have the respective meanings indicated below for all
purposes of this Agreement:
"Action" means any action, suit, arbitration or proceeding by
or before an Governmental Authority, whether criminal, civil, regulatory or
otherwise.
"Agreement" means this Asset Purchase Agreement, including the
attached Exhibits and Schedules.
"Applicable Law" means all applicable provisions of all
(i) constitutions, treaties, statutes, laws (including the common law),
rules, regulations, ordinances, codes or orders of any Governmental Authority
and (ii) Governmental Approvals.
"Code" means the Internal Revenue Code of 1986, as amended.
20
"Consents" means any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license exemption
or order of, registration, certificate, declaration of filing with, or report
or notice to, any person, including, but not limited to any Governmental
Authority.
"Encumbrances" means mortgages, liens, encumbrances, security
interests, claims, charges, or other legal or equitable encumbrances and any
other matters affecting title (including, in the case of real property,
rights-of-way, easements and encroachments).
"Governmental Approval" means any consent, approval,
authorization, waiver, permit, grant, franchise, concession, agreement,
license, exemption or order of registration, certificate, declaration or
filing with, or report or notice with or to any Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any governmental authority,
agency, department, board, commission or Instrumentality of the United States,
any State of the United States or any political subdivision, thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory
organization.
"Known" or "Knowledge" means the actual personal knowledge,
without independent investigation, of an individual employed by a Party for
whom a significant portion of his or her duties relates to matters as to
which the applicable representation or warranty is made hereunder.
"Parent's SEC Reports" shall mean the Report on Form 10-K
for the Parent's fiscal years ended December 31, 2002 and 2003, Reports on
Form 10-Q for the quarters ended March 31, 2002, June 30, 2002, September
30, 2002 and March 31, 2003, proxy statements dated January 22, 2002 and
November 14, 2002 and Reports on Form 8-K dated May 14, 2002, June 18, 2002
and August 6, 2002.
"Permitted Encumbrances" means liens for taxes, assessments
and governmental charges or liens which are not yet due.
"Pre-Billed Amount" means the pro rata amount of all invoices
billed by the Division with respect to services to be performed by the Division
for the periods following the Closing Date, such pro rata amount shall be
equal to the total amount of an invoice multiplied by a fraction, the numerator
of which is the number of days in the billing period after the Closing Date,
and the denominator of which is the total number of days in the billing period.
"Person" means an individual, a partnership, a corporation,
an association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a Governmental Authority.
"Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, stamp, occupation,
franchise, withholding, social security, unemployment, disability, real
property, personal property, sales, use or transfer tax, value added tax,
including any interest, penalty, or addition thereto, whether disputed or not.
21
"Tax Return" means any return, report, declaration, form,
claim for refund or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Users" means any organization or individual using the
Division's Intellectual Property, including the CareNet Network, and/or any
organization or individual licensed by Seller to use the Division's
Intellectual Property, including the CareNet Network.
"User Assets" means the tangible and intangible assets of
the Users which are in the care, custody and control of Seller and are used
by Seller to provide the Users access to the CareNet Network or to the
Division's Intellectual Property. A complete list of the User Assets is set
forth on Schedule 1.4.
9.2. Additional Terms. The terms "hereof," "herein" and "hereunder"
and terms of similar import are references to this Agreement as a whole and not
to any particular provision of this Agreement. The term including as used in
this Agreement is used to list items by way of example and shall not be deemed
to constitute a limitation of any term or provision contained herein. As
used in this Agreement, the singular or plural number shall be deemed to include
the other whenever the context so requires. Section, paragraph, clause,
Exhibit and Schedule references contained in this Agreement are references to
sections, clauses and schedules in or to this Agreement, unless otherwise
specified.
IN WITNESS WHEREOF, the Parties have duly executed this Asset Purchase
Agreement as of the date first above written.
"SELLER"
SHUTTLE DATA SYSTEMS CORP., a
Michigan corporation, d/b/a ADIA
INFORMATION MANAGEMENT CORP.
By:
------------------------------------
Its:
------------------------------------
"XXXXXX"
------------------------------------
XXXXXX XXXXXX, XX.
"PURCHASER"
CREATIVE SOCIO-MEDICS CORP.
By:
-----------------------------------
Its:
-----------------------------------
"PARENT"
NETSMART TECHNOLOGIES, INC.
a Delaware corporation
By:
----------------------------------
Its:
----------------------------------
22
EXHIBITS AND SCHEDULES
Exhibit A - Promissory Note
Exhibit B - Registration Rights Agreement
Exhibit C - Warranty Xxxx of Sale
Exhibit D - Non-Compete Agreement
Exhibit E - Release
Exhibit F - License Agreement
Exhibit G - Employment Agreement
Exhibit H - Consulting Agreement
Exhibit I - Lease
Schedule 1.1(a) Division's Intellectual Property
Schedule 1.1(b) Service Agreements
Schedule 1.1(d) Public Health Contracts
Schedule 1.1(e) Equipment
Schedule 1.5 User Assets
Schedule 3.3 Conflicts
Schedule 3.4 Litigation
Schedule 3.6 Liens
Schedule 3.7 Material Contracts
Schedule 3.9 Permits/Licenses
Schedule 3.10 List of Employees
Schedule 3.11 Employee Benefit Plans
Schedule 3.12 Tax Matters
Schedule 3.13 Assumed Contracts/Consents
Schedule 3.14 No Undisclosed Liabilities
