ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of June 17, 2005, between Creative Socio-Medics Corp., a
Delaware corporation (the "Purchaser") and Addiction Management Systems, Inc., a
New York corporation, (the "Seller"). The Purchaser and Seller are referred as
the "Parties". Unless otherwise indicated, capitalized terms used but not
defined are defined in Article 10.1.
WHEREAS, Seller is engaged in the business of developing, licensing and
servicing computer software for managing the clinical record keeping, billing
and certain other requirements of organizations and facilities, which provide
addiction management services to their clients (the "Clinics") (the "Business");
WHEREAS, the Purchaser is a wholly owned subsidiary of Netsmart
Technologies, Inc., a Delaware corporation (the "Parent");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, Seller's assets used in connection with 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
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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, all the assets used by the Seller in connection
with or related to the Business, 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, except for the Assumed
Liabilities. 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 owned by Seller and used in connection
with the operation of or related to the Business and used as of the date hereof
by the Seller to service the Licensees (defined below) (the "Seller's
Intellectual Property"). A complete list of the Seller's Intellectual Property
is set forth on the attached Schedule 1.1(a);
(b) All agreements in effect as of the Closing Date entered into by
Seller under which Seller has agreed to (i) license or provide Seller's
Intellectual Property to users/licensees and other entities to whom Seller
provides such Intellectual Property and related services ("Licensees"); (ii)
maintain and support the Intellectual Property and software systems licensed to
Licensees; (iii) provide an interface between Licensees and laboratories; and
(iv) preserve or require Licensees to preserve confidential patient information
under HIPAA (as defined below) (items (i)-(iii) are collectively referred to as
the "Seller's Agreements;" item (i) is referred to as the "License Agreements";
item (ii is referred to as the "Support Agreements"; item (iii) is referred to
as the "Lab Agreements;" and item (iv) is referred to as the "Business Associate
Agreements"). A complete list of the customers with which AMS has License
Agreements and Support Agreements as of the date hereof is set forth on the
attached Schedule 1.1(b). The parties with whom AMS has Lab Agreements as of the
date hereof are Bendiner Xxxxxxxxxxx and Xxxxx Laboratories. Some of the License
Agreements also have related Business Associated Agreements.
(c) The computer hardware apparatus, computers, tapes and the Seller's
other tangible forms of media, electronic data processing equipment, fixtures,
furniture, machinery and other equipment used by Seller to develop the
Intellectual Property and to provide services offered as part of the Business,
as listed on the attached Schedule 1.1(c) (the "Equipment");
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(d) The inventory of supplies, equipment (for resale) and similar items,
including without limitation those listed on Schedule 1.1(d) (the "Other
Assets"), which Purchaser will purchase and for which Seller will be entitled to
payment (at cost) at Closing as provided below. Seller will not be required to
remove (and may abandon in place) all unpurchased assets and other items of
personalty located at or about the Premises;
(e) The goodwill associated with the Business;
(f) All third party warranties and claims under warranties relating to
the Equipment;
(g) All of Sellers books, records, files and papers of the Business (but
not Seller's personal and organizational documents, books and records), to the
extent in Seller's possession or control, whether in hard copy or computer
format, including invoices, engineering information, sales and promotional
literature, manuals and data, sales and purchase correspondence, and
documentation developed or used for accounting, marketing, engineering,
manufacturing or any other purpose related primarily to the conduct of the
Business at any time prior to the Closing, including all creative materials
(including, without limitation, films, advertising art work, color separations
and the like), advertising and promotional materials and all other printed or
written materials;
(h) All of Seller's lists and records pertaining to present, former and
prospective licensees and customers, distributors and suppliers of the Business
with respect to the last five calendar years of its operations and to the extent
in Seller's possession or control, provided that in the case of present
Licensees and customers, any such records in Seller's possession and control
shall be included in the Purchased Assets; and
(i) All third party licenses for software used by Seller for the
Business, to the extent they may be assigned to Purchaser. A list of such
licenses is attached as Schedule 1.1(i).
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, other than the Purchased
Assets (collectively, the "Excluded Assets"). The Excluded Assets include all
bank accounts, cash in the bank, artwork, all of Xxxxx'x personal effects,
marketable securities, cash equivalents, accounts receivable for all periods up
to and including the Closing Date;
1.3. Assumed Liabilities. On the Closing Date, Purchaser shall assume
and agree to discharge or perform, and shall defend, save, indemnify and hold
Seller harmless from and against, all costs, expenses, liabilities, obligations
and commitments of the Seller arising after the Closing Date with respect to the
following items (collectively, the "Assumed Liabilities"): (i) the Seller's
Agreements to the extent arising from or resulting from events occurring after
the Closing Date; (ii) the lease (the "Lease") for space at 00-00 00xx Xx., Xxxx
Xxxxxx Xxxx, XX 00000-0000 (the "Premises"), dated October 16, 2003, a copy of
which will be delivered to Purchaser prior to the date hereof; (iii) telephone,
Internet/ISP, utility and other charges with respect to the Premises and/or
operation of the Business or Purchaser's business therefrom; (iv) sales,
personal property and other taxes on Seller's Agreements to the extent liability
for the same accrues for any period after the Closing.
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 Business or otherwise, including, without limitation, Seller's pension
plan for its employees, other than the Assumed Liabilities (collectively, the
"Excluded Liabilities").
1.5 Transfer of Seller's Agreements. At the Closing, Seller will transfer and
assign to Purchaser all of its rights under the Seller's Agreements. In the
event that any Seller's Agreement requires Seller to obtain the consent or
approval (the "Approval") of the counterparty thereto to the sale or assignment
of Seller's rights and interests therein, then (i) Seller will have no
obligation to obtain the same (and will have no liability in the event it is
unable to do so), (ii) Purchaser hereby assumes all risks and liabilities with
respect to the inability to obtain the same; (iii) at Purchaser's request,
Seller will include in the notice to Licensees to be executed by the Parties at
Closing in the form attached hereto as Schedule 1.5, a request for Approvals
from those Licensees specified by Purchaser; and (iv) Purchaser hereby
indemnifies and agrees to save Seller and Xxxxx (as defined below) harmless from
and against any claims by Licensees arising out of or related to Approvals. The
inability to obtain Approvals will in no event affect Seller's rights or
Purchaser's obligations under this Agreement. If any such consent to Seller's
assignment of a Seller's Agreement is required and cannot be obtained with
respect to any such Seller's Agreement, then Seller and Purchaser shall
cooperate in an arrangement reasonably satisfactory to both parties under which
Purchaser would obtain, to the extent practicable, the claims, rights and
benefits and assume the corresponding obligations under such Seller's Agreement
in accordance with this Agreement, including subcontracting, sub-licensing or
sub-leasing to Purchaser, or under which Seller would enforce for the benefit of
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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 (other than the Pre-Billed Amount defined
below, and other sums that are not payable to Purchaser under the terms of this
Agreement) received by Seller under any Seller Agreement 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, Purchaser will pay to Seller the amount of
$2,700,000 (subject to adjustments as set out in Section 1.8 below) (the
"Purchase Price"). The Purchase Price shall be paid at Closing, subject to any
adjustment (the "Adjustments") to be made pursuant to Section 1.8 below.
Purchaser will pay the Purchase Price in good and cleared funds by Federal Funds
Wire Transfer to the following account (or such the other account(s) as
specified by Seller in the Closing Statement (as defined below): account of
Addiction Management Systems, Inc. (Account No. 748501282165, ABA Routing No.
000000000, at Chase Bank, 000-00 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxx Xxxx, 00000,
Attention Xxx Xxxxxxx, Telephone No. 000-000-0000.
1.7 Purchase Price Allocation. The aggregate consideration paid by
Purchaser to Seller pursuant to this Agreement shall be allocated among the
Purchased Assets, including any intangible assets, as Seller and Purchaser have
agreed after negotiation. Such allocation is set forth in Schedule 1.7, 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 Schedule
1.7, 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.
1.8 Purchase Price Adjustments At Closing
The Purchase Price will be adjusted at the Closing as follows:
(a) For purposes of this Agreement, the term "Pre-Billed Amount" means
(i) the pro rata amount of all invoices billed by Seller, but not paid as of the
Closing Date with respect to annual support services to be performed by the
Seller for the period following the Closing Date, which 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, and
(ii) the pro rata amount of all amounts paid to the Seller (other than with
respect to invoices included in clause (i) of this sentence) prior to the
Closing with respect to annual support services to be performed by the Seller
for the periods following the Closing Date, such pro rata amount shall be equal
to the total amount paid 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 number of days in the billing period. Seller shall have and
retain the sole and exclusive right to receive and retain the Pre-Billed Amount,
which the Parties estimate would be approximately $600,000 if the Closing Date
were to occur on June 30, 2005. No adjustment will be made to the Purchase Price
if the Pre-Billed Amount at the Closing Date is equal to, or less than $600,000.
A schedule of the Pre-Billed amounts as of the Closing Date will be prepared by
Seller for the Closing. The Pre-Billed Amount shall not include any License Fees
or Other Fees due with respect to New Seller Agreements (as such terms are
defined in subparagraph (b) below). In the event that the Pre-Billed Amount is
more than $600,000 on the Closing Date, the Purchase Price will be reduced by
the amount by which the Pre-Billed Amount exceeds $600,000. In addition to its
rights set out below, Purchaser acknowledges and agrees that with respect to any
Pre-Billed Amounts or other amounts set out in subparagraph (b) below that have
been invoiced by Seller, but not paid by any Licensee or other party, Seller
shall have and retain the right to proceed against such party for collection of
any unpaid amounts, and Purchaser will reasonably cooperate with Seller in
connection with any action or proceeding brought to enforce Seller's rights
hereunder.
(b) Seller acknowledges and agrees that Purchaser will be entitled to a
credit at Closing against the Purchase Price for all payments (other than those
included within the Pre-Billed Amount) received by Seller from Licensees, and
for all amounts (other than those included within the Pre-Billed Amount) billed
by Seller to Licensees after May 21, 2005 and prior to the Closing Date for (i)
license fees attributable to the licensing or use of Seller's Intellectual
Property or software (the "License Fees") under Seller's Agreements entered into
by Seller on and after May 21, 2005 up to the Closing Date (the "New Seller's
Agreements"); and for (ii) all installation and training and support services
fees, and charges for customizing software, and the price of computer hardware
sold to the Licensee pursuant to such New Seller's Agreements, received or
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billed by Seller under New Seller's Agreements entered into by Seller on and
after May 21, 2005 up to the Closing Date, to the extent such installation,
training, support and customization services have not been performed by Seller
prior to the Closing Date, or the Seller has not paid for such computer hardware
prior to the Closing Date (the "Other Fees"). Schedule 1.1(b) hereto sets out
all of the New Seller Agreements in effect as of the Closing Date and the
Closing Statement sets out the amount of the credit due to Purchaser hereunder.
1.9 Adjustments at Closing At Closing, the parties will make other
customary adjustments for income and expenses attributable to the Business,
Assumed Liabilities and Purchased Assets. Such adjustments will be set out in
the Closing Statement, and the parties will make post-closing adjustments to the
same where reasonably necessary. The closing adjustments will include (a)
payment to Seller for the security deposit under the Lease, (b) to the extent
they have been paid, Assumed Liabilities allocated for the month in which the
Closing occurs, including rent and additional rent under the Lease, and expenses
attributable to the Premises and Business (e.g., utilities, telephone and ISP
service, but excluding stamps and postage and other deminimus items.); (c)
payment to Seller for the value at cost of all inventory used in connection with
the Business and delivered to Purchaser or otherwise left at the Premises at
Closing, as listed in Schedule 1.1(d); and (d) insurance premiums for policies
of Seller assumed by Purchaser.
1.10. Cooperation; Examination of Books and Records. Purchaser covenants
and agrees that (i) the Pre-Billed Amount is and shall remain the sole and
exclusive Property of Seller, and (ii) in the event that either Purchaser
receives payment of any Pre-Billed Amount, it will promptly remit the same to
Seller. For a period of 10 months following the Closing, Seller shall have the
right if it reasonably believes that Purchaser has not remitted any payment due
to Seller hereunder, and upon reasonable notice to enter upon the Premises and
Purchaser's offices for purposes of (i) accessing and receiving mail addressed
to Seller; and (ii) examine Parent's and Purchaser's books and records in order
to confirm compliance with the provisions of this Section 1.10. Seller hereby
agrees to indemnify, defend and save Purchaser harmless from and against any and
all costs, liens, losses, claims, liabilities or expenses relating to personal
injury or property damage, including reasonable attorneys' fees and costs,
arising out of or related to Seller's negligent acts or willful misconduct
related to any entry upon or activities at the Premises and Purchaser's offices
with respect to Seller's conduct of its due diligence investigations under this
Section 1.10. Purchaser and Parent agree to cooperate with Seller in the event
of any such examination, and to provide copies of documentation where reasonably
requested by Seller Any such examination shall be at Seller's sole cost and
expense unless Seller shall discover any material breach or default on
Purchaser's part. The provisions of this Section 1.10 will survive the Closing.
ARTICLE II
THE CLOSING
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2.1. The Closing. The closing of the transaction contemplated hereby
(the "Closing") shall take place on June 17, 2005, at the offices of Parent at
0000 Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxx Xxxx, 00000, or at such other place as
may be mutually agreeable to each of the Parties (the "Closing Date"). The
parties may mutually agree on an earlier Closing date. The Closing shall be
effective as of 12:01 a.m. on the day immediately following the Closing. The
parties agree that the statement (the "Closing Statement")annexed hereto as
Schedule 2.1 reflects all financial aspects of the transaction, including the
final Purchase Price, and all closing adjustments and sums, due from Purchaser
at the Closing and the manner in which Seller elects to have such amounts paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
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The Seller does hereby represent and warrant to the Purchaser 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 New York.
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 that Seller is
required to execute under the terms of this Agreement (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
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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) to the Seller's
Knowledge, any Applicable Law applicable to the Seller or the Purchased Assets;
or (b) the articles of incorporation or bylaws or other organizational documents
of the Seller; or (c) any Seller Agreement or other Material Contract; provided,
however, that Seller makes no representation with respect to, and Purchaser
hereby assumes all risks relating to, the need for Approvals relating to
assignment of the Seller's Agreements.
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 that would
adversely affect the Seller in connection with the Purchased Assets, the
Business or transactions contemplated by this Agreement nor does Seller have any
Knowledge of any basis for the commencement of any such Action against Seller.
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 Seller's
Intellectual Property developed and/or owned by Seller and 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 Seller's Intellectual Property, Seller has no Knowledge that it has
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 Seller's Intellectual Property. The consummation of the
transactions completed by this Agreement will not result in the loss or
impairment of any of the Seller's Intellectual Property.
3.6. Purchased Assets. Except for the Excluded Assets and any computer
hardware and equipment, pumps, and other items of personal property and
equipment that Seller re-sells to customers, the Purchased Assets constitute all
of the assets that are owned by Seller and used in the operation of the
Business. To its Knowledge, the Equipment being used by the Seller in the
Business as of the date hereof, whether leased or owned, is in working order,
repair and operating condition. There are no outstanding liens on the Purchased
Assets, except as set forth on Schedule 3.6 (the "Liens,") and Seller has and
will convey to the Purchaser at Closing all of Seller's rights and interests and
to the Purchased Assets, free and clear of any and all Encumbrances.
3.7. Material Contracts. Other than: (a) this Agreement, the Lease, the
Seller's Agreements, and the other agreements and documents contemplated hereby,
(b) any New Seller's Agreements for Licenses, Support or other services to be
provided by Seller or Purchaser in the ordinary course of the 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 expressly set forth in each Material Contract or set
forth in the Schedule 3.7, to Seller's Knowledge, no consent of any third party
is required under any Material Contract as a result of or in connection with,
the Closing under this Agreement, 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. A true, correct and complete copy of each Material Contract
will be delivered to Purchaser prior to the date hereof.
3.8. Compliance with Applicable Laws and Regulations. To its Knowledge,
Seller has not violated any 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, which could result in liability of
$5,000 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.
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3.9. Permits and Licenses. To its Knowledge, Seller has obtained all
permits, licenses, franchises and other authorizations necessary with respect 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 that
Seller deems necessary for the conduct of the Business are in full force and
effect and no action or proceeding has been commenced or threatened with respect
to the revocation or suspension of any such permits, licenses, franchises or
authorizations to Seller's Knowledge. A true, correct and complete copy of each
permit, license, franchises and other authorization will be delivered to
Purchaser prior to the date hereof.
3.10. Employees; Labor Matters, etc. Schedule 3.10 contains a complete
and accurate list of all of the Seller's current employees (the "Employees") and
independent contractors, their respective dates of hire or retention, 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 or independent
contractor is subject to an employment or consulting agreement and (b) to
Seller's Knowledge, 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, and (c) Seller has paid
all salaries, bonuses, fees, and other amounts due to the Employees and
independent consultants up to the Closing Date. 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
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).
The Seller has made available to the Purchaser prior to the date of this
Agreement true, correct and complete copies of all Employee Benefit Plans and to
Seller's Knowledge, all material documents pursuant to which such plans are
maintained, administered and funded.
3.12. Tax Matters.
(a) To its Knowledge, (a) Seller has filed all Tax Returns with respect
to the Seller and the Business which it is required to file under applicable
laws and regulations, and (b) all such Tax Returns are complete and correct and
have been prepared in compliance with all applicable laws and regulations.
(b) To its Knowledge, the Seller has paid all Taxes with respect to the
Seller 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 Business.
(d) Since January 1, 2005, Seller has not incurred any liability for
Taxes with respect to 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 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 Business.
(g) To Seller's Knowledge 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
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any such authority. The Seller is not a party to any action, proceeding, audit,
investigation or inquiry by any government authority relating to Taxes, which
could result in a liability to the Buyer.
3.13. Seller's Agreements Each of the Seller's Agreements with the
parties set out in Schedule 1.1(b) is in full force and effect on the date
hereof. Seller has received no written notice that it is in default of any
obligations required to be performed by it to date under, and to its Knowledge,
is not in default in respect of, any such Seller's Agreements. To Seller's
Knowledge, except for periodic late payments or arrears by third parties
thereunder, no such other party to any such Seller's Agreements is in default in
respect thereof, and otherwise, to Seller's Knowledge and except as set out in
each of the Seller's Agreements, there are no grounds for the termination or
cancellation of such Seller's Agreement by the Seller or a Licensee. No other
party to a Seller's Agreement has, to Seller's Knowledge, provided Seller with
written notice that Seller is in default under such Seller's Agreement or that
it intends to terminate or fail to renew any such Seller's Agreement. Any
provision hereof to the contrary notwithstanding, Seller makes no
representations with respect to whether the Seller's Agreements may be assigned
without first obtaining Approvals, and Purchaser hereby assumes all risks and
liabilities with respect to the failure to obtain such Approvals, or the
exercise by any party of a right to terminate any of the Seller's Agreements by
virtue of this Agreement or the Closing hereunder. Purchaser further
acknowledges and agrees that Seller makes no representations that Seller's
Intellectual Property or any of its products or services are error or "bug"
free, and that Licensees from time to time have expressed dissatisfaction with
Seller or the performance of its Intellectual Property. Seller has set out in a
letter dated as of June 17, 2005 an itemization of certain Licensees that have
expressed dissatisfaction from time to time with the Intellectual Property
and/or Seller's provision of products or services to them, and the reasons given
for such dissatisfaction.
3.14. No Undisclosed Liabilities. Except as reflected in the Financial
Statements, and except for current liabilities incurred by Seller directly in
connection with the operation of the Business in the ordinary course, and the
Assumed Liabilities, Seller has no material debts, liabilities or obligations of
any nature or kind arising out of transactions entered into, at or prior to the
Closing (other than Seller's Agreements requiring Approvals), which could
reasonably be expected to prevent Seller from being able to sell and assign the
Purchased Assets to Purchaser in accordance with the terms of this Agreement, or
which could affect, in any material way, Seller's ability to enter into or
consummate this Agreement or perform its obligations hereunder. Except for
Seller's representation that it has not received any written notice of a
violation by it under any Business Associate Agreement executed by Seller,
Seller makes no representation with regard to compliance of the Purchased Assets
with the requirements of the federal Health Insurance Portability and
Accountability Act of 1996, as amended.
3.15. Consents and Approvals of Governmental Authorities. To its
Knowledge, 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.
3.16 No Untrue Statement. No representation or warranty made by Seller
in this Agreement 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.
3.17. Brokers, Finders, etc. 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.
3.18 Revenue From Support Agreements. Schedule 1.1(b) sets forth the
annualized Gross Revenues payable with respect to each Support Agreement in
effect as of the date hereof. Seller has not received any written notice of the
termination of a Support Agreement by a Licensee. Other than periodic late
payments and arrears, all revenues due to Seller are being collected by Seller
under the Support Agreements, and Seller provides support services as required
by the current Support Agreements, with a staff of not more than eight fulltime
employees as of the date hereof.
3.19 HIPAA. Seller has not received any notice from any governmental
agency or authority advising it that its Intellectual Property does not comply
with the requirements of the Health Insurance Portability and Accountability Act
of 1996, as codified at 42 U.S.C. section 1320d ("HIPAA").
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE PURCHASER AND PARENT
---------------------------
The Purchaser represents and warrants 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.
4.2. Authorization, etc. The Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement, and the other agreements,
documents, instruments, exhibits, schedules, and certificates of Purchaser or
Parent contemplated hereby (the "Other Buyer Documents"), to perform fully their
respective obligations under this Agreement, and the Other Buyer Documents, and
to consummate the transactions contemplated hereby and thereby. The Board of
Directors and, if necessary, the shareholders, of Purchaser have taken all
action required to authorize the execution and delivery of this Agreement and
the Other Buyer Documents by Purchaser , the performance of the obligations of
the Purchaser hereunder and thereunder and the consummation by Purchaser of the
transactions contemplated hereby and thereby. No other corporate proceedings on
the part of Purchaser are necessary to authorize the execution and delivery of
this Agreement and the Other Buyer Documents or the performance by Purchaser of
its obligations hereunder and thereunder. This Agreement constitutes, and the
Other Buyer Documents to which Purchaser or Parent is a party, when executed and
delivered, will constitute, legal, valid and binding obligations of the
Purchaser, enforceable against it in accordance with their terms.
4.3. No Conflicts, etc. The execution, delivery and performance by the
Purchaser of this Agreement and the Other Buyer 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 , (b) the certificate of incorporation or by-laws or
other organizational documents of the Purchaser or (c) any material contract,
agreement or other instrument to which the Purchaser are parties or by which the
Purchaser or are bound.
4.4. Litigation. There is no material Action pending, or to the
Purchaser's Knowledge threatened, against or relating to the Purchaser or
relating to the transactions contemplated by this Agreement that would have a
material adverse effect on the Purchaser's ability to satisfy the Assumed
Liabilities.
4.5. Available Funds. The Purchaser has funds available to consummate
the transactions contemplated by this Agreement, including without limitation
making all payments due to Seller hereunder and to satisfy the Assumed
Liabilities in accordance with their terms, and Purchaser's bank has approved
the transactions contemplated hereby.
4.8. No Untrue Statement. No representation or warranty made by
Purchaser in this Agreement or Other Buyer Documents, nor any statement,
certificate, exhibit, schedule or list furnished by Purchaser 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 manner as
to give rise to any valid claim against the Seller for any brokerage or finder's
commission, fee or similar compensation.
4.10 Except for current liabilities incurred by Purchaser directly in
connection with the operation of their businesses in the ordinary course since
January 1, 2005, Purchaser has not incurred any material debts, liabilities or
obligations of any nature or kind (whether absolute, accrued, contingent,
unliquidated or otherwise, 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,
Purchaser's ability to enter into or consummate this Agreement or perform its
obligations hereunder.
4.11 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
Purchaser in connection with the execution or delivery by the Purchaser of this
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Agreement or any of the Other Buyer Documents, the performance by the Purchaser
of their obligations thereunder or the consummation by the Purchaser of the
transactions contemplated hereby or thereby.
4.12 Access to Information - Purchaser and Parent are engaged, among
other thing, in the software business and compete with the Business of the
Seller, and as such, Purchaser and Parent are familiar with the business in
which Seller is engaged; and are not relying on any projections, information,
representations or warranties by Seller or any other parties not expressly set
forth herein. Pursuant that certain letter agreement dated as of May 28, 2005
(the "Letter Agreement"), Purchaser has been given access the information it
deemed material and necessary as a precondition to executing this Agreement and
Other Buyer Documents. Purchaser agrees to promptly advise Seller in the event
that it becomes aware of any misstatement or omission of material facts by
Seller in this Agreement, or misrepresentations by Seller under Article 3 of
this Agreement. Purchaser's failure to provide such notice or advice to Seller
shall not provide Seller with a defense to a claim for breach by Seller of a
warranty or representation made by it hereunder.
ARTICLE V
OTHER COVENANTS AND AGREEMENTS
------------------------------
5.1. Employees' Continued Employment. Other than in the case of Xxxxxx
Xxxxxxxxx ("MA"), nothing contained in this Agreement shall obligate Purchaser
to employ any employees of the Seller. Nothing contained in this Agreement shall
confer upon any employee of the Seller any right to continued employment after
the Closing Date, except with respect to MA.
5.2. Access; Due Diligence. During the Due Diligence Period defined in
the Letter Agreement, Seller provided access and information to Purchaser, and
Purchaser, based on such access and information, satisfied itself as to
information needed in order to evaluate entering into this Agreement and closing
hereunder. The terms and conditions of the Letter Agreement are hereby
incorporated herein by reference and made a part hereof. If, following the
Closing Date, it is necessary that Purchaser or Seller obtain additional
information relating to the Purchased Assets and Business or Assumed Liabilities
for the period prior to or after the Closing Date in order to ascertain
Purchaser's and Seller's compliance with its obligations under Article 1 above
or 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 Purchased Assets, Assumed Liabilities, and New Seller's
Agreements (to the extent the same were not delivered to Purchaser at the
Closing). Purchaser is deemed to be familiar with the Seller's Intellectual
Property, the Seller's Agreements and Other Assets ,and the Assumed Liabilities
as of the Closing (provided, however, that Purchaser shall not be deemed to be
familiar with or to have accepted those matters or conditions, if any, that
Seller failed to disclose to Purchaser, or which Purchaser could not have
reasonably ascertained by its examination of the Seller's Intellectual Property,
the Seller's Agreements and Other Assets and, Assumed Liabilities. Seller will
not be liable for, and Purchaser hereby releases Seller from any claims relating
to, errors or bugs in the Intellectual Property or in any software or systems
sold or licensed by Seller and transferred to Purchaser hereunder, other than
errors or bugs which result in a claim of infringement by a third party (other
than claims of infringement arising out of modifications or changes to the
Intellectual Property after the date hereof). Subject to the foregoing ,
Purchaser agrees to promptly advise Seller if it becomes aware of any
misstatement or omission of material facts by Seller in this Agreement, or
misrepresentations by Seller under Article 3. Purchaser's failure to provide
such notice or advice to Seller shall not provide Seller with a defense to any
claim of a breach by Seller of a warranty or representation made by it
hereunder.
Purchaser further acknowledges that neither Seller, nor any agent,
employee or representative of Seller or any other person purporting to represent
Seller has made, and Purchaser has not been induced by nor relied upon, any
statement, warranty or representation, whether express or implied, as to the
subject matter of this Agreement, except as are expressly set out herein.
Purchaser hereby agrees to indemnify, defend and save Seller harmless from and
against any and all costs, liens, losses, claims, liabilities or expenses
relating to personal injury or property damage, including reasonable attorneys'
fees and costs, arising out of or related to Purchaser's activities or conduct
of its due diligence investigations under this Agreement. The indemnities and
representations (each of which shall be deemed repeated at the Closing) by
Purchaser and Seller herein shall survive the Closing Date or the expiration or
termination of this Agreement (subject to the terms, conditions and limitations
set out in Article 6 below).
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5.3. Transfer Tax. Seller and Purchaser shall comply 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 with respect to
all intangible assets, and Purchaser shall pay the same with respect to all
machinery, equipment and other tangible assets.
5.4. Financial Statements. Purchaser has received and during the Due
Diligence Period will review Seller's financial statements for its fiscal year
ended December 31, 2003 and December 31, 2004, and for the quarter ended March
31, 2005 (collectively, the "Financial Statements") in order to confirm that
they fairly in all material respects reflect the financial position of the
Seller at such dates and the results of operations and cash flows for the
respective periods ended on such dates.
5.5. Continuing Employees. On the Closing Date, Seller shall terminate
all of the Seller's employees and the Purchaser shall offer employment to
commence immediately on the Closing Date to MA and those employees of the Seller
who are employed immediately prior to the Closing Date and are listed on
Schedule 5.5 ("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 herein as
to coverage for Continuing Employees under specific plans or programs of the
Purchaser. Seller makes no warranty or representation that MA or any other of
the Employees will agree to work for Purchaser, and except in the event MA
refuses to enter into the Employment Agreement (defined below), Purchaser's
obligations under this Agreement shall in no event be affected by the refusal of
any Employee other than MA to so accept employment with Purchaser, or to remain
in Purchaser's employ. From and after the Closing Date, Purchaser shall be
responsible for payment of all salaries, health benefits, withholding taxes,
vacation pay, and other compensation or payments required to be made with
respect to MA and any other Employees that agree to work for Purchaser for the
period subsequent to the Closing Date.
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 Closing Date, 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,
that as long as Seller shall not be exposed to any cost, loss or liability as
the result thereof, unless Purchaser agrees to indemnify Seller against such
cost, loss or liability, 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. Expenses. Except as set forth in this Section, 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.
5.9 Notice of Material Developments. From the date of this Agreement
until the Closing Date, Seller and Purchaser and Parent will give prompt written
notice to the each other of any material development affecting the ability of
such party to consummate the transactions contemplated in this Agreement.
5.10 Bulk Sales. Purchaser waives compliance by Seller with the bulk
sales law of New York State or any other state or jurisdiction where Seller
conducts its business or had existing creditors on the Closing Date. Seller
agrees to pay all of its just debts and liabilities, except as assumed by
Purchaser hereunder, and will indemnify Purchaser for any Loss resulting from
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its failure to comply with any bulk sales laws relating to the sale of the
Purchased Assets.
5.11 Confidentiality. The provisions of this Agreement to the contrary
notwithstanding, until the Closing Date, Purchaser and Parent covenant and agree
that all information and materials provided to them shall be held and maintained
in strictest confidence in accordance with the terms of the Letter Agreement and
that certain Confidentiality Agreement dated as of March 22, 2005 (the
"Confidentiality Agreement"), the terms of which are hereby incorporated herein
by reference and made a part of this Agreement as if set out in full. Neither
Purchaser nor Parent will furnish any third parties, other than employees,
attorneys, accountant's and other similar agents of Purchaser or Parent with any
information or materials pertaining to Seller unless and until such parties
shall have agreed in writing (with a copy to Seller) be bound by the terms and
provisions of a confidentiality agreement which is at least as restrictive as
the Confidentiality Agreement.
5.12 No Communications. Purchaser and Parent acknowledge that they are
competitors of Seller, and that their communications with Licensees or
Prospects, including advising any of the same of the existence of, or pendency
of the transaction contemplated by, this Agreement, could cause Seller
irrevocable harm and damage, Accordingly, without first receiving Seller's prior
written approval, neither Purchaser nor Parent will communicate with or contact
any Licensee or Prospect. The provisions of this Section 5.10.3 will survive any
termination of this Agreement.
ARTICLE VI
SURVIVAL OF REPRESENTAIONS AND WARRANTIES; INDEMNIFICATION
6.1 Survival of Representations and Warranties. Except as expressly
provided in this Agreement, all representations and warranties made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
not terminate, but shall survive the Closing and continue in effect until
one (1) year following the Closing Date; provided, however, that any such
representation or warranty as to which a claim shall have been asserted in
writing during such survival period shall continue in effect until such time as
such claim shall have been resolved or settled.
6.2. Indemnification by Purchaser. Purchaser hereby agrees to indemnify,
defend and hold harmless Seller, Seller's officers, directors, shareholders,
employees, independent contractors, agents, successors and assigns and Xxxxx
(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 material breach of any representation or warranty of Purchaser
or Parent contained in this Agreement, (provided, however, that Purchaser shall
have no liability under this Agreement for the first $20,000 of damages arising
out of or relating to any misrepresentation or breach of a warranty or
representation by Purchaser);
(b) any breach (other than of a representation or warranty) or failure
of Purchaser to perform any covenant or agreement required to be performed by it
pursuant to this Agreement or any of the Other Buyer Documents;
(c) Losses resulting from the Premises, Purchased Assets and/or the
Business from and after the Closing Date, other than Losses which result from
use or operation of the Premises Purchased Assets and/or Business prior to the
Closing, including without limitation, Losses which result from a claim of
infringement by a third party after the Closing (but not including claims of
infringement arising out of modifications or changes to the Intellectual
Property after the Closing); and
(d) the Assumed Liabilities, or Purchaser's failure to perform, pay and
discharge any Assumed Liability following the Closing.
6.3. Indemnification by Seller. Seller agrees to indemnify, defend and
hold harmless Purchaser and its officers and directors (collectively, the
"Purchaser Parties") from and against any and all Losses 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 material breach of any representation or warranty of Seller
contained in, this Agreement, (provided, however, that Seller shall have no
liability under this Agreement for the first $20,000 of damages arising out of
or relating to any misrepresentation or breach of a warranty or representation
by Seller);
11
(b) any breach (other than of a representation or warranty)or failure of
Seller or to perform any covenant or agreement required to be performed by
Seller pursuant to this Agreement or in the Assignment; and
(c) any Excluded Liability, or Seller's failure to perform, pay and
discharge any Excluded Liability prior to or following the Closing.
The provisions hereof to the contrary notwithstanding, Seller will not be deemed
to have indemnified Purchaser from and against (i) any Losses arising out of
Seller's Agreements resulting from Purchaser's actions or omissions, occurring
from and after the Closing Date, or (ii) Assumed Liabilities to the extent
liability for the same accrues for any period after the Closing.
6.4. 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.
6.5. Limitations on Indemnification. Except with respect to liabilities
under Section 6.2(a) or 6.3(a) above, neither Purchaser on the one hand, nor
Seller on the other hand shall be liable to the other for any claim for
indemnifiable damages unless the aggregate of all Losses exceeds two Thousand
Five Hundred Dollars ($2,500), whereupon such Party shall be liable for the
amount of all Losses incurred by the Party claiming indemnification (the
"Claimant").
6.6. 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 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 Article, 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. 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 6.2 or Section 6.3, as the case
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may be, and as provided in the preceding sentence, each party shall bear its own
fees and expenses incurred pursuant to this Article 6.6. The provisions hereof
to the contrary notwithstanding, Purchaser agrees to include Seller and Xxxxx as
insureds under its contract liability, general liability and products liability
insurance policies, naming Seller and Xxxxx as insureds thereunder for so long
as the Seller's Agreements remain in effect. Except in instances where Seller is
determined to be liable under its indemnification obligations in Article 6 of
this Agreement, Purchaser further agrees to look first to its insurance
carrier(s) under any such policies for recovery prior to asserting any claim
against Seller with respect to the same. Purchaser shall provide Seller, with
thirty days notice of cancellation of any such policy. The provisions of this
Article VI will survive Closing.
6.7 For purposes of this Article VI, the term "Losses" shall mean all
damages, liabilities, losses, 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.
6.8 Seller agrees that the Net Proceeds (as defined herein) from the
Closing as provided in this Section 6.8 shall be held as a reserve to secure
Seller's liability under this Article 6 in the manner set out herein. For
purposes hereof, the term Net Proceeds shall mean $2,641,945. Out of the net
Proceeds, $2,000,000 (the "Retained Proceeds") shall be retained by Seller, and
not released, distributed or paid as a dividend to its shareholders, or
otherwise used or expended, except as follows: (a) 100% of the Retained Proceeds
shall be held and retained by Seller until the last day of the third full
calendar month following the Closing Date, on which day, Seller may release,
distribute, dividend out, use or expend 25% of the Retained Proceeds; (b) the
remaining Net Proceeds shall then be held until the last day of the sixth full
calendar month following the Closing Date, on which day, Seller may release,
distribute, dividend out, use or expend 25% of the remaining Retained Proceeds;
(c) the remaining Retained Proceeds shall then be held until June 17, 2006 (the
"Distribution Date") on which day, Seller may release, distribute, dividend out,
use or expend the balance of the Net Proceeds then remaining. The dates on which
Seller may release part or the remainder of the Retained Proceeds are herinafter
referred to as a "Release Date". Notwithstanding the foregoing, in the event an
indemnification claim has been made against Seller under this Article VI at any
time before the final Release Date, the amount to be released at a Release Date
shall be reduced by the amount of any indemnification claim made against Seller
prior to such Release Date. Except for claims asserted by Purchaser against
Seller prior to the Distribution Date, the Seller Parties shall leave no further
liability under this Agreement or the other Seller Documents from and after the
Distribution Date (except that Seller and Xxxxx shall remain liable for any
breach of the Covenant not to compete annexed to this Agreement as Exhibit C).
6.9 Xx. Xxxxxx Xxxxx ("Xxxxx"), controlling principal of Seller, and its
President and its sole director has agreed to guarantee the obligations of
Seller under Section 6.8 above in accordance with the terms of the Guaranty (the
"Xxxxx Guaranty") annexed hereto as Exhibit E, which Seller will cause Xxxxx to
execute and deliver at Closing. Parent has agreed to guarantee the obligations
of Purchaser under this Agreement and the Other Buyer Documents in accordance
with the form of guaranty attached hereto as Exhibit E-1, which Purchaser shall
cause Parent to execute and deliver at the Closing (the "Parent Guaranty").
6.10. Notwithstanding anything contained in this Agreement, the Other
Seller's Documents or the Other Buyer's Documents, except in the case of fraud,
neither party hereto shall be liable to the other for indirect, special,
incidental, consequential or punitive damages claimed by such other party
resulting from such first party's breach of its representations, warranties or
covenants hereunder. The parties further acknowledge and agree that their sole
and exclusive remedy with respect to any and all claims relating to this
Agreement, the Business, the Purchased Assets, the Excluded Assets, the Assumed
Liabilities, the Excluded Liabilities or the transactions contemplated hereby
(other than claims of, or causes of action arising from, fraud) shall be
pursuant to the indemnification provisions set forth in this Article VI, and (i)
Purchaser further agrees that its sole recourse against the Seller Parties with
respect to this Agreement shall be limited to the amount of the Net Proceeds,
and (ii) Seller further agrees that its sole recourse against the Purchaser
Parties with respect to this Agreement shall (other than with respect to the
obligations under Section 6.2(c) or (d) above) be limited to the amount of the
Net Proceeds. In furtherance of the foregoing, the parties hereby waive, from
and after the Closing, any and all rights, claims and causes of action (other
than claims of, or causes of action arising from, fraud) Purchaser may have
against Seller or Seller may have against Purchaser, or any of their respective
directors, officers and employees arising under or based upon any Federal,
State, provincial, local or foreign statute, law, ordinance, rule or regulation
(except pursuant to the indemnification provisions set forth in this Article
VI).
13
ARTICLE VII
CLOSING DELIVERIES
------------------
7.1. Seller's Deliveries. At the Closing, Seller shall deliver or cause
to be delivered to Purchaser the following:
(a) An assignment and assumption agreement (the "Assignment") in the
form attached to this Agreement as Exhibit A, pursuant to which Seller will
transfer and assign good and marketable title to the Purchased Assets free and
clear of any and all Encumbrances, and Purchaser will assume all obligations
thereunder from and after the Closing;
(b) A Warranty Xxxx of Sale, in substantially the form attached to this
Agreement as Exhibit B;
(c) The non-compete agreement between each of Seller and Xxxxx and
Purchaser and Parent substantially in the form attached to this Agreement as
Exhibit C, pursuant to which Seller and Xxxxx shall agree not to compete with
Purchaser in the conduct of the Business for a period of two years after the
Closing Date (the "Non-Compete");
(d) The Closing Statement signed by Seller's President setting forth the
Purchase Price (to the extent adjustments to the same have been made in
accordance with Section 1.8 above), and other adjustments to be made at Closing;
(e) Certified copies of the resolutions by which the corporate action on
the part of Seller necessary to approve this Agreement and the transactions
contemplated hereby were taken;
(f) 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;
(g) Good standing certificate of Seller issued by the Department of
State of New York State dated as of a date within 30 days prior to the Closing
Date, which Seller has delivered prior to the date hereof;
(h) The opinion of counsel to Seller;
(i) A notice to Licensees (the "Notice") in the form of Schedule 7.1
hereto advising them of the assignment and transfer of the Seller's Agreements,
and for Licensees under pending or executed New Agreements that have not been
completed, directing them to make payments of license fees to Seller and all
other payments to Purchaser;
(j) The Xxxxx Guaranty to be executed by Xxxxx;
(k) The Seller's Agreements; and
(l) Such other documents or instruments as the Purchaser 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, as determined in accordance with Section 1.8
above, and adjusted by any adjustments in Seller's or Purchaser's favor for the
other items set out in Section 1.10 above;
(b) The Assignment;
(c) The Non-Compete;
(d) 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;
(e) 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;
(f) Good standing certificates of Purchaser and Parent issued by the
Delaware Secretary of State. Each dated as of a date within 30 days prior to the
Closing Date;
14
(g) The opinion of Xxxxx Xxxxxxxxx Esq., counsel to Purchaser;
(h) The Notice;
(i) An employment agreement (the "Employment Agreement") in the form of
Exhibit D hereto, which the Parties expect will be countersigned at or before
the Closing by MA;
(j) All certificates of insurance that Purchaser is required to obtain
and keep in force and effect from and after Closing;
(k) The Parent Guaranty to be executed by Parent; and
(l) Such other documents or instruments as Seller may reasonably request
to effect the transactions contemplated by this Agreement.
Article VIII
------------
CONDITIONS PRECEDENT
--------------------
8.1 Conditions to Obligations of Each Party. The obligations of each
Party to consummate the transaction contemplated hereby shall be subject to the
fulfillment on or prior to the Closing Date of the following conditions:
(a) No Injunction, etc. Consummation of the transactions contemplated by
this Agreement shall not have been restrained, enjoined or otherwise prohibited
by any order, injunction, decree or judgment of any court or other governmental
authority.
(b) Representations; Covenants. The representations and warranties of
the other Party hereto as set forth in this Agreement shall be true and correct
in all material respects at and as of the Closing Date and the such other Party
shall have duly performed and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it prior to or on the Closing Date (including, without
limitation, payment of all sums and delivery of all documentation required by
this Agreement).
(c) Documentation. All documents relating to the transactions
contemplated in this Agreement and required to be delivered in accordance with
Article VII of this Agreement shall be in form and content set out in this
Agreement.
Article IX
----------
MISCELLANEOUS
-------------
9.1. 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.
9.2. 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 sent by receipted
next-day or overnight courier delivery to the applicable address set forth
below.
If to Purchaser: Copy to:
--------------- -------
Creative Socio-Medics, Corp. Xxxxx X. Xxxxxxxxx
Attn: Xxxxx Xxxxxx 000 Xxxx 00xx Xxxxxx
0000 Xxxxxxx Xxxxxxx, Xxxxx X000 Xxx Xxxx, XX 00000
Xxxxx Xxxxx, Xxx Xxxx 00000 Fax: (000) 000-0000
15
If to Seller:
Up until the Closing Date:Addiction
Management Systems, Inc.
Attn: Xx. Xxxxxx Xxxxx, President
00-00 00xx Xx.
Xxxx Xxxxxx Xxxx, XX 00000-0000
After the Closing Date: Copy to:
-------
C/o Xxxxxx Xxxxx, MD Xxxxxx X. Xxxxxxx
00 Xxxxxxx Xxxxx 0000 Xxxxxxxxxxxxx Xx.
Xxxxx Xxxx, XX 00000 Xxxxxxx Xxxxx, XX 00000
000 000 0000
000 000 0000 (Fax)
-------------------------------------------------------------------------------
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 on the day delivered, provided, however,
an additional copy is also sent by telecopy (with confirmation of receipt).
9.3. Entire Agreement. This Agreement, the schedules and exhibits
attached to this Agreement, the Letter Agreement, and the Confidentiality
Agreement, and the Other Sellers Documents and Other Buyers 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.
9.4. 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.
9.5. 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. The parties hereto waive trial by
jury in any action, proceeding or counterclaim arising out of this Agreement.
The provisions of this paragraph shall survive the Closing. In the event of any
litigation between the parties arising out of the subject matter of this
Agreement, including without limitation, any action premised upon a claimed
breach of the terms, conditions or covenants of this Agreement, the prevailing
party in such action shall be entitled to recover all reasonable attorney's
fees, court costs and disbursements that are incurred by it, from the other
party.
9.6. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns.
9.7. Assignment. This Agreement shall not be assignable or otherwise
transferable by any Party hereto without the prior written consent of the other
Party. Any attempted assignment by a party without the prior written consent of
the other party shall be void and the assigning party shall be deemed in default
hereunder. Any permitted assignments shall not relieve, alter or release the
assigning party from its primary liability under this Agreement.
9.8. 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.
9.9. Press Releases and Public Announcements. Effective after the
Closing, the parties hereto shall issue a joint press release (the "Release") in
the form of Schedule 9.9 hereto. The Parties shall not issue any other oral or
written announcements or releases relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
parties hereto, except as required by applicable law. Neither Purchaser nor
Seller will release or cause or permit to be released any advertising promotion
relating to, or otherwise announce or disclose or cause or permit to be
announced or disclosed, the terms, conditions or substance of this Agreement
without first obtaining the mutual written consent of the parties hereto.
9.10. 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
16
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.
9.11. Any matter disclosed on any Schedule to this Agreement is deemed
disclosed on all other Schedules to which such disclosure would be reasonably
applicable.
9.12. 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.
9.12. 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.
9.13. Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated by reference and made a
part of this Agreement
9.14. Performance. At all times under this agreement where certain time
constraints are set forth, the parties have agreed that TIME IS OF THE ESSENCE
and that no extensions of said time limits are expected or agreed to unless
expressly set out in this Agreement or otherwise agreed to specifically in
writing.
9.15. Survival. The parties hereto expressly acknowledge and agree that
neither party has any obligations with respect to the Premises that survive
termination of this Agreement or Closing, except as specifically set forth in
this Agreement. The provisions of this Section shall survive the termination of
this Agreement or Closing.
9.16. Mail. Purchaser agrees to accept all U.S. mail, UPS deliveries,
and Federal Express packages addressed to Seller for a period of one year after
Closing. All such deliveries shall be held by Purchaser for pick-up by a
representative of Seller. Purchaser shall have no liability for its negligence,
loss or damage to any such delivery.
9.17. Name Change. As of the Closing Date, Seller execute reasonable
documentation prepared by Purchaser so as to change Seller's corporate name to
RACS-4, Inc. and Seller shall cease use of the initials "AMS."
9.18. No Claim. Purchaser agrees that it will not assert any claim
against the Seller Parties of any nature whatsoever in the event that any
Licensees cancel or terminate Seller's Agreements after the date hereof (except
in the event that any Licensee cancels or terminates its Seller's Agreement due
to a misrepresentation by Seller under Article III of the Agreement.
ARTICLE X
DEFINITIONS
-----------
10.1. 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.
17
"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.
"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.
"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.
10.2. 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, Article, 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"
ADDICTION MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------
Xxxxxx Xxxxx, MD
Its: President
----------------------------
"PURCHASER"
CREATIVE SOCIO-MEDICS CORP.
By: /s/ X. X. Xxxxxxxx
---------------------------
X.X. Xxxxxxxx
Its: C.F.O.
--------------------------
18
EXHIBITS AND SCHEDULES
----------------------
Exhibit A - Assignment
Exhibit B - Warranty Xxxx of Sale
Exhibit C - Non-Compete Agreement
Exhibit E - Xxxxx Guaranty
Exhibit E-1- Parent Guaranty
Schedule 1.1(a) - Intellectual Property
Schedule 1.1(b) - Seller's Agreements
Schedule 1.1(c) - Equipment (Non-Inventory)
Schedule 1.1(d) - Other Assets
Schedule 1.1(i) - 3rd Party Software
Schedule 1.5 - Notice to Licensees
Schedule 1.7 - Allocation of Purchase Price
Schedule 2.1 - Closing Statement
Schedule 3.4 - Litigation
Schedule 3.6 - Liens - Lease
Schedule 3.7 - Material Contracts
Schedule 3.10 - List of Employees and Independent Contractors
Schedule 3.11 - Employee Benefit Plans
Schedule 3.12 - Tax Matters - None
Schedule 5.1 - Employment Agreement with Xxxxxxx Xxxxxxxxx
Schedule 5.5 - Continuing Employees - Same as Schedule 3.10
Schedule 6.8 - Net Proceeds
Schedule 9.9 - Press Release
19
EXHIBIT A
ASSIGNMENT OF LEASE AND SELLER'S AGREEMENTS, AND ASSUMPTION AGREEMENT
---------------------------------------------------------------------
KNOW ALL MEN BY THESE PRESENTS that, ADDICTION MANAGEMENT SYSTEMS, INC., a New
York corporation, having an office at 00-00 00xx Xx., Xxxx Xxxxxx Xxxx, XX
00000-0000 ("Assignor"), in consideration of Ten ($10.00) Dollars and other good
and valuable consideration in hand paid by Creative Socio-Medics Corp., a
Delaware corporation, having an office at 0000 Xxxxxxx Xxxxxxx, Xxxxx X000,
Xxxxx Xxxxx, Xxx Xxxx 00000 ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged, hereby assigns unto Assignee all of Assignor's right,
title and interest in and to (1) that certain lease (the "Lease") between
Assignor, as tenant, and Telebeam Plaza Corporation, as landlord, dated as of
October 16, 2003 with respect to certain land and improvements described therein
located at 00-00 00xx Xx., Xxxx Xxxxxx Xxxx, XX (the "Premises"), as and (2)
those certain software license and support agreements (the "Seller's
Agreements") set out in Schedule 1 hereto, all in accordance with the terms of
that certain Asset Purchase Agreement (the "Purchase Agreement") between
Assignor, as seller, and Assignee, as purchaser dated as of June 17, 2005 (and
all capitalized and undefined terms used herein will have the meanings given to
them in the Purchase Agreement);
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, from and
after the date hereof, subject to the terms, covenants, conditions and
provisions contained in the Lease and Seller's Agreement;
RESERVING, HOWEVER, to Assignor and its predecessors, successors and assigns,
(a) the right to be saved, indemnified, defended and held harmless by the
licensees under the Seller's Agreements from and against any claims, actions,
proceedings or other matters for which the licensor and/or servicor thereunder
would be or is indemnified under the terms thereof (or any documents entered
into in connection therewith); and (b) the right to receive the Pre-Billed
Amount.
Assignor warrants and represents that (1) it is the tenant under, the Lease and
that the Lease has not been modified and is in full force and effect as of the
date hereof, but Assignor makes no representation as to whether it has the right
to transfer and assign the Lease; and (2) the Seller's Agreements are in full
force and effect and have not been modified or amended, except as set forth in
or permitted by the Purchase Agreement. Assignor specifically reserves to itself
all rights with respect to any arrears in payments or charges accrued under the
Seller's Agreements for any period prior to the date hereof, in accordance with
the terms of the Purchase Agreement.
Assignee hereby assumes the performance of all of the terms, covenants and
conditions of the Lease and Seller's Agreements arising from and after the date
hereof and hereby agrees to perform all of the terms, covenants and conditions
of (x) the Lease to be performed on, from and after the date hereof, all with
the full force and effect as if Assignee had signed the Lease originally as the
tenant named therein, and (y) the Seller's Agreements to be performed on, from
and after the date hereof, all with the full force and effect as if Assignee had
signed the Seller's Agreements originally in place and stead of Assignor.
Assignee does hereby agree for itself, its successors and assigns, to indemnify,
defend and save Assignor, its successors and assigns, harmless from and against
any and all claims and liability asserted or arising in connection with the
performance by Assignee under the Lease and Service Agreements from and after
the date hereof, in accordance with the terms of the Purchase Agreement.
Assignor does hereby agree for itself, its successors and assigns, to indemnify,
defend and save Assignee, its successors and assigns, harmless from and against
any and all claims and liability asserted or arising in connection with (a) the
Lease attributable to any period prior to the date hereof (excluding, however,
any claim by the landlord that the assignment hereunder is in breach of the
Lease), and (b) the Seller's Agreements attributable to any period prior to the
date hereof (excluding, however, any claim by any licensee thereunder that the
assignment hereunder is in breach of its Service Agreement), and made on or
before the first anniversary of the date of this Assignment.
IN WITNESS WHEREOF, the parties hereto have signed this instrument as of this
17th day of June 2005.
ASSIGNOR: ADDICTION MANAGEMENT SYSTEMS, INC. CREATIVE SOCIO-MEDICS CORP.
By: /s/ Xxxxxx Xxxxx MD BY: /s/ X.X. Xxxxxxxx
----------------------------- --------------------------
Xxxxxx Xxxxx, MD., President X.X. Xxxxxxxx, CFO
20
EXHIBIT B
WARRANTY XXXX OF SALE AND ASSIGNMENT
AND
ASSUMPTION AGREEMENT
This Warranty Xxxx Of Sale And Assignment And Assumption Agreement (the "Xxxx of
Sale") is made and entered into as of June 17, 2005, by and between Creative
Socio-Medics Corp., a Delaware corporation (the "Purchaser"), and Addiction
Management Systems, Inc., a New York Corporation (the "Seller").
RECITALS
A. Seller, Purchaser, and Netsmart Technologies, Inc. have entered into that
certain Asset Purchase Agreement dated as of June 17, 2005, (the "Purchase
Agreement"). Capitalized terms used but not defined in this Xxxx of Sale shall
have the meanings given to them in the Purchase Agreement.
For good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties agree as follows:
1. Seller hereby sells, transfers, assigns, conveys and otherwise delivers to
Purchaser all of its right, title and interest in and to the Purchased Assets
(other than the Seller's Agreements), free and clear of all Encumbrances, except
as provided in the Purchase Agreement.
2. Seller covenants and agrees with Purchaser and its successors and assigns
that Seller will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, any and all such further acts,
instruments, papers and documents as may reasonably be necessary to carry out
and effectuate the intent and purpose of the Purchase Agreement and this Xxxx of
Sale, provided the same do not increase any of Seller's obligations or
liabilities or require Seller to incur any cost or expense not reimbursed by
Purchaser.
3. This Xxxx of Sale has been executed and delivered in the State of New York
and shall be construed and enforced in accordance with the laws of such state,
without regard to its conflict of laws principles.
4. This Xxxx of Sale is being executed and delivered in accordance with the
Purchase Agreement.
5. This Xxxx of Sale may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one instrument.
Addiction Management Systems, Inc.
/s/ Xxxxxx Xxxxx
----------------------------
By: Xx. Xxxxxx Xxxxx
President
Creative Socio-Medics Corp.
/s/ X.X. Xxxxxxxx
----------------------------
By: X.X. Xxxxxxxx
Title: CFO
21
EXHIBIT C
COVENANT NOT TO COMPETE AND NON-SOLICIATION AGREEMENT
-----------------------------------------------------
This Covenant Not To Compete And Non-Solicitation Agreement (the
"Covenant") is made and entered into as of June 17, 2005, by Xx. Xxxxxx Xxxxx
("Xxxxx"), and Addiction Management Systems, Inc., a New York corporation
("Seller", and together with Xxxxx "Covenanters") in favor of Netsmart
Technologies, Inc., a Delaware corporation ("Parent") and Creative Socio-Medics
Corp., a Delaware corporation, and a subsidiary of Parent ("Purchaser," and
together with Parent, "Covenantees").
RECITALS:
A. Covenanters are parties to an Asset Purchase Agreement dated June 17,
2005, (the "Purchase Agreement"), pursuant to which Covenantees purchased from
Covenanters (the "Acquisition") certain of the assets of the Seller's business
of developing, licensing and servicing computer software for managing the
clinical record keeping and certain other requirements of organizations and
facilities which provide addiction management services to their clients (the
"Business");
B. The execution and delivery of this Covenant is being made in
accordance with the terms of the Purchase Agreement.
NOW, THEREFORE, for and in consideration of mutual agreements and
premises contained in the Purchase Agreement, the mutual covenants and
agreements set forth below and other good and valuable consideration, the
receipt and adequacy of which are acknowledged, Covenanters and Covenantees
agree as follows:
1. Covenanters covenant, warrant and agree, for the benefit of
Covenantees, their parents and subsidiaries, and their respective
successors and assigns (collectively, the "Covenant
Beneficiaries"), that without first obtaining Covenantees'
express written consent, Covenanters shall not, either directly
or indirectly:
(a) for a period of two (2) years commencing on the date of
this Covenant (the "Covenant Period"), engage or compete
with any of the Covenant Beneficiaries in the Business
(defined below), or any facet of the Business, anywhere
within the United States of America (collectively, the
"Area of Non-competition");
(b) during the Covenant Period, have any interest in or be
associated with (whether as a shareholder, partner,
member, associate, owner or otherwise) any corporation,
partnership, limited liability company, association,
trust, firm or other enterprise which competes with
any of the Covenant Beneficiaries in the Business or any
part of the Business, anywhere within the Area of
Non-competition; except that notwithstanding the
foregoing, the Covenanters may (i) invest in any
publicly-held business entity engaged in the
Business, if the Covenanters' aggregate investment
does not exceed one (1.0%) percent in value of the issued
and outstanding equity securities of such business
entity, and (ii) continue to manage and operate, and be
an employee of or otherwise involved in, the Bridge
Plaza Treatment & Rehabilitation Center (or its successors
or affiliates);
(c) divert from any of the Covenant Beneficiaries, or by aid
of others, do anything which diverts from any of the
Covenant Beneficiaries, any trade or business related to
the Business with any customer or vendor of any of the
Covenant Beneficiaries;
(d) solicit, induce or attempt to induce any employee, or
any independent contractor who is retained by any of
any of the Covenant Beneficiaries to perform services
relating to the Business or relating to any other
software business of Covenant Beneficiaries to (i)
leave the employment of or terminate his, her or
its contractual relationship with such Covenant
Beneficiaries, or (ii) enter into the employ of or a
contractual relationship with any Covenanter, any
entity in which any Covenanter has any interest, or
any competitor of any of the Covenant Beneficiaries;
(except that in no event will any Covenanter be deemed
to be in violation of this provision in the event
that any employee or independent contractor responds
to any advertisement or other general solicitation not
22
directed specifically at such party made by a publicly
held company in which a Covenanter has an interest) or
(e) use, publish, disseminate, distribute or otherwise
disclose any Confidential Information (defined below).
Notwithstanding this clause (e), Covenanters may
disclose Confidential Information if required (and
then only to the extent required) by applicable law;
provided, however, that prior to any such disclosure,
Covenanters must provide Covenantees with written
notice of such pending disclosure, sufficiently in
advance thereof so as to allow Covenantees a
reasonable opportunity to contest such required
disclosure; and provided, further, that in connection
with any such required disclosure, Covenanters must
use reasonable efforts to cause the intended recipient
to treat the Confidential Information required to be
disclosed confidentially and otherwise in accordance
with this clause (e).
As used in this Covenant, the term "Business" shall have the meaning
ascribed to it in the Purchase Agreement. As used in this Covenant, the
term "Confidential Information" means any and all information,
regardless of nature or kind, which in any way is related to or concerns
the Covenanters or the Business (including, without limitation,
information relating to trade secrets, marketing strategies, methods of
operation, machinery, equipment, distribution processes, sources of
supplies, operating and other cost data, customer lists and customer
contacts, agreements and their terms and conditions, and any other
information which is not generally known), whether disclosed orally or
in writing, and whether learned, acquired or known by Covenanters prior
to or after the date of this Covenant, except that which Covenanters can
demonstrate: (a) prior to the date of this Covenant, was generally
publicly available; or (b) after the date of this Covenant, (i) becomes
publicly available without fault of or action on the part of
Covenanters, or (ii) is acquired by Covenanters from a third party, free
of any restrictions as to its disclosure.
2. The parties intend that the covenants set forth in paragraph 1
above shall be a series of separate covenants with respect to each of
the Covenant Beneficiaries. The parties acknowledge and agree that
the covenants set forth in paragraph 1 above are reasonable and
valid in geographical and temporal scope and in all other respects.
If any court determines that any covenant set forth in paragraph 1
above, or any portion of any such covenant, is invalid or
unenforceable, the remainder of the covenants set forth in
paragraph 1 above shall not be affected and shall be given full force
and effect, without regard to the invalid covenant or the invalid
portion. If any court determines that any covenant set forth in
paragraph 1 above, or any portion of any such covenant, is unenforceable
because of its duration or geographic scope, such court shall have the
power to reduce such duration or scope, as the case may be, and to
enforce such covenant or portion in such reduced form. The parties
intend to and hereby confer jurisdiction to enforce the covenants
set forth in paragraph 1 above on the courts of any jurisdiction
within the geographical scope of such covenants. If the courts of any
one or more of such jurisdictions hold the covenants set forth in
paragraph 1 above, or any portion of any such covenant, unenforceable
by reason of the breadth of such scope or otherwise, it is the parties'
intention that such determination not bar or in any way affect the
right of the Covenant Beneficiaries to the relief provided above in
the courts of any other jurisdiction within the geographical scope of
such covenants as to breaches of such covenants in such other
respective jurisdictions.
3. The parties covenant and agree that in the event of a breach or
attempted breach of any of the covenants set forth in paragraph 1 above,
in addition to any and all legal and equitable remedies immediately
available, such covenants may be enforced by a temporary and/or
permanent injunction in an action in equity, without the necessity of
posting a bond. The parties acknowledge that the remedy at law for a
breach or threatened breach of any of the covenants set forth in
paragraph 1 above would be inadequate.
4. This Covenant shall not be assignable by Covenanters. The Covenantees
shall be permitted to assign this Covenant in connection with a merger
of Purchaser or Parent pursuant to which Purchaser or Parent is the
non-surviving corporation or a sale or other transfer of substantially
all of either of Purchaser's or Parent's assets, no matter how effected.
5. This Covenant shall be binding on and shall inure to the benefit of
Covenanters, the Covenant Beneficiaries and their respective successors
and assigns.
6. This Covenant shall be construed in accordance with and governed by the
laws of the State of New York, without regard to its conflict of laws
principles. The parties hereto waive trial by jury in any action,
23
proceeding or counterclaim arising out of this Agreement. In the event
of any litigation between the parties arising out of the subject matter
of this Covenant, the prevailing party in such action shall be entitled
to recover all reasonable attorney's fees, court costs and disbursements
that are incurred by it, from the other party.
7. This Covenant may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one
instrument. Facsimile or photostatic copies of signatures to this
Covenant shall be deemed to be originals and may be relied on to the
same extent as the originals.
IN WITNESS WHEREOF, the parties have executed this Covenant Not to
Compete and Non-Solicitation Agreement as of June 17, 2005.
Addiction Management Systems, Inc.
A New York corporation
By: /s/ Xxxxxx Xxxxx
--------------------------
Xx. Xxxxxx Xxxxx
Its: President
--------------------------
/s/ Xxxxxx Xxxxx
--------------------------
Xx. Xxxxxx Xxxxx
Netsmart Technologies, Inc.,
a Delaware corporation
By: /s/ X.X. Xxxxxxxx
--------------------------
Its: C.F.O.
--------------------------
Creative Socio-Medics Corp.,
a Delaware corporation
By: /s/ X.X. Xxxxxxxx
----------------------------
Its: C.F.O.
--------------------------
24
EXHIBIT E
Xxxxx Guaranty
--------------
GUARANTY
--------
THIS GUARANTY, dated as of this 17th day of June 2005, ("Guaranty"), is made and
delivered by Xx. Xxxxxx Xxxxx, ("Guarantor'), to and for the benefit of Creative
Socio-Medics Corp., a Delaware corporation (the "Purchaser"), and its successors
and assigns (the "Beneficiary").
RECITALS
A. Guarantor is the controlling principal of Addiction Management Systems, Inc.,
a New York corporation ( the "Seller"). Beneficiary and Seller are parties to an
Asset Purchase Agreement, of even date herewith (the "APA).
B. Guarantor has agreed to guaranty the obligations of Seller under Section 6.8
of the APA (the "Section 6.8 Obligations") in the event Seller fails to satisfy
or discharge such Section 6.8 Obligations as required by the terms of the APA,
subject to and under the terms of this Guaranty.
NOW THEREFORE, in consideration of the foregoing recitals, and for other
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to the
Beneficiary the Seller's due performance of the Section 6.8 Obligations.
Guarantor hereby represents, stipulates and acknowledges that he has received
reasonably equivalent value for his obligations under this Guaranty.
2. Enforcement Costs. Guarantor shall hold Beneficiary harmless from all
liabilities, damages, costs and expenses, including such Beneficiary's
reasonable attorneys' fees and expenses, that may be incurred in the enforcement
of this Guaranty or any provision hereof (collectively, such liabilities,
damages, costs and expenses, together with the Section 6.8 Obligations, are the
"Obligations").
3. Modifications and Waivers.
(a) Modification of Seller's Obligations. Beneficiary, in their sole discretion
and from time to time and at any time, and without affecting, impairing or
discharging any Obligations, may: (i) take any Modification Action; and (ii)
enforce or exercise in any sequence whatsoever, or waive, fail or refuse to
enforce or exercise, any one or more claims, rights or remedies. of any kind or
nature, which Beneficiary may at any time have against Seller. The term
"Modification Action" means: (x) any change to, or amendment or modification of,
the APA (y) any extension, in whole or in part, of the time for or terms of
performance of any obligation of Seller; and (z) any settlement, compromise,
release, substitution, surrender, modification, forbearance or impairment of any
Section 6.8 Obligation.
(b) No Modification or Waiver of Guaranty Unless In Writing. No amendment or
modification of this Guaranty, nor any waiver or modification of any right or
remedy of the Beneficiary hereunder shall be enforceable against the Beneficiary
unless such amendment, modification or waiver is set forth in a written
agreement executed by such Beneficiary.
4. Guaranty Absolute. This Guaranty is an absolute, continuing, unconditional
and unlimited guaranty of the Obligations. Beneficiary: (i) may proceed against
Guarantor upon the occurrence of any default by Seller of any of its
Obligations; and shall not be required to take any action or commence any
proceeding of any kind against Seller contemporaneously with or before
proceeding against Guarantor. The liability of Guarantor hereunder shall
continue in full force and effect until all Obligations are fully and
indefeasibly met by Seller or otherwise are satisfied in full; and shall not be
reduced, affected, impaired, or discharged, in whole or in part, by any payment
which any Beneficiary thereafter returns, refunds or pays, in whole or in part,
to Seller or to any successor, assign or successor-in-interest to Seller
(including any receiver. liquidator, trustee in bankruptcy, trustee for the
benefit of creditors or any debtor-in-possession in a case under title 11 of the
United States Code, as amended from time to time (the "Bankruptcy Code"), or any
other person or entity acting as an officer of a court or as a fiduciary for
creditors), in settlement or pursuant to a judgment or order, in respect of the
assertion of any claim of any kind relating thereto, including any claim of
breach of contract, breach of warranty. illegality, invalidity, actual or
constructive fraud, under Sections 544, 547, 548, 549 or 550 of the Bankruptcy
Code, under other federal law or under applicable state law.
25
5. Waiver of Notice, Etc. Guarantor irrevocably waives; (a) notice of the
acceptance of this Guaranty by the Beneficiary; (b) notice of presentment,
demand for payment, non-payment and protest of any other obligation of Seller;
(c) any and all rights to notice of, or to consent to, any action that
Beneficiary may take in accordance with Section 3(a) hereof; (d) unless and
until Beneficiary shall have received indefeasible payment in full of all
Obligations; and (e) its right to demand a trial by jury in any case, action or
proceeding that involves a claim, demand, action or cause of action arising
under or out of, or otherwise relating to this Guaranty.
6. Governing Law. THIS GUARANTY SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISIONS THEREOF.
7. Jurisdiction; Venue. Any action, proceeding or claim commenced by the
Beneficiary or the Guarantor, against the other pursuant to this Guaranty must
be brought in the New York Supreme Court for the County of Nassau. Seller, the
Beneficiary and Guarantor each irrevocably and unconditionally commits to the in
person jurisdiction of such Court and waives, to the fullest extent permitted by
law, any objections which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in such court. Any claim
that any such suit, action or proceeding brought in such court has been brought
in an inconvenient forum and the right to object, with respect to any such suit,
action or proceeding brought in such court, that such court does not have
jurisdiction over the person of such party.
8. Notices: All notices to Guarantor shall be delivered by Federal Express or
other receipted, overnight delivery service as follows:
If to Seller or Guarantor:
00 Xxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxxxxxx Xx.
Xxxxxxx Xxxxx, XX 00000
If to Beneficiary:
Attn: Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxx, Xxxxx X000
Xxxxx Xxxxx, Xxx Xxxx 00000
With a copy to
Xxxxx X. Xxxxxxxxx, Esq.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
8. Final Judgment. Beneficiary and Guarantor each agrees that a final
non-appealable judgment in any such suit, action or proceeding brought in such a
court shall be conclusive and binding.
9. Successors and Assigns. This Guaranty is and shall be: binding on Guarantor
and its successors and assigns; and inure to the benefit of Beneficiary and its
successors and assigns.
10. Severability. If any provision of this Guaranty shall be determined by a
court of competent jurisdiction to be unenforceable in whole or part, then such
provision shall be ineffective (but only to the extent that such provision is
unenforceable) and the balance of this Guaranty shall be deemed valid and
enforceable and construed as if the offending provision had been omitted or
deleted from this instrument.
11. Guarantor stipulates and agrees that it has been adequately represented in
the negotiation of this Guaranty and consequently that this Guaranty and the
terms and provisions hereof shall not be interpreted or construed against
Beneficiary.
26
IN WITNESS WHEREOF. this Guaranty has been duly executed and delivered by the
Guarantor as of the date first set forth above.
GUARANTOR: BENEFICIARY
Creative Socio-Medics Corp.
/s/ Xxx Xxxxx By: /s/ X.X. Xxxxxxxx
------------------------ -------------------------
Xx. Xxxxxx Xxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: C.F.O.
Sworn to before me this 17th day of June 2005
/s/ Xxxxx X. Xxxxxxx
-----------------------------
Notary Republic
27
EXHIBIT E-1
Parent Guaranty
GUARANTY
--------
THIS GUARANTY, dated as of this 17th day of June 2005, ("Guaranty"), is made and
delivered by Netsmart Technologies, Inc., a Delaware corporation ("Guarantor"),
to and for the benefit of Addiction Management Systems, Inc., a New York
corporation (the "Beneficiary").
RECITALS
A. Guarantor is the sole shareholder of Creative Socio-Medics Corp. ("CSM"), the
purchaser under an Asset Purchase Agreement of even date herewith (the "APA")
with Beneficiary, as the seller thereunder.
B. Guarantor has agreed to guaranty all of the obligations of CSM under the APA
and Other Buyer Documents defined therein (the "APA Obligations") in the event
Purchaser fails to satisfy or discharge such APA Obligations as required by the
terms of the APA and/or Other Buyer Documents, subject to and under the terms of
this Guaranty.
NOW THEREFORE, in consideration of the foregoing recitals, and for other
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to the
Beneficiary the APA Obligations. Guarantor hereby represents, stipulates and
acknowledges that it has received reasonably equivalent value for its
obligations under this Guaranty.
2. Enforcement Costs. Guarantor shall hold Beneficiary harmless from all
liabilities, damages, costs and expenses, including such Beneficiary's
reasonable attorneys' fees and expenses, that may be incurred in the enforcement
of this Guaranty or any provision hereof (collectively, such liabilities,
damages, costs and expenses, together with the APA Obligations, are the
"Obligations").
3. Modifications and Waivers.
(a) Modification of CSM's Obligations. Beneficiary, in its sole discretion and
from time to time and at any time, and without affecting, impairing or
discharging any Obligations, may: (i) take any Modification Action; and (ii)
enforce or exercise in any sequence whatsoever, or waive, fail or refuse to
enforce or exercise, any one or more claims, rights or remedies of any kind or
nature, which Beneficiary may at any time have against CSM. The term
"Modification Action" means: (x) any change to, or amendment or modification of,
the APA (y) any extension, in whole or in part, of the time for or terms of
performance of any obligation of CSM; and (z) any settlement, compromise,
release, substitution, surrender, modification, forbearance or impairment of any
Obligation.
(b) No Modification or Waiver of Guaranty Unless In Writing. No amendment or
modification of this Guaranty, nor any waiver or modification of any right or
remedy of any Beneficiary hereunder shall be enforceable against any Beneficiary
unless such amendment, modification or waiver is set forth in a written
agreement executed by each Beneficiary.
4. Guaranty Absolute. This Guaranty is an absolute, continuing, unconditional
and unlimited guaranty of the Obligations. Beneficiary: (i) may proceed against
Guarantor upon the occurrence of any default by CSM of any of its obligations
under the APA or Other Buyer Documents; and shall not be required to take any
action or commence any proceeding of any kind against CSM contemporaneously with
or before proceeding against Guarantor. The liability of Guarantor hereunder
shall continue in full force and effect until all Obligations are fully and
indefeasibly met by CSM or otherwise are satisfied in full; and shall not be
reduced, affected, impaired, or discharged, in whole or in part, by any payment
which any Beneficiary thereafter returns, refunds or pays, in whole or in part,
to CSM or to any successor, assign or successor-in-interest to CSM (including
any receiver. liquidator, trustee in bankruptcy, trustee for the benefit of
creditors or any debtor-in-possession in a case under title 11 of the United
States Code, as amended from time to time (the "Bankruptcy Code"), or any other
person or entity acting as an officer of a court or as a fiduciary for
creditors), in settlement or pursuant to a judgment or order, in respect of the
assertion of any claim of any kind relating thereto, including any claim of
breach of contract, breach of warranty. illegality, invalidity, actual or
constructive fraud, under Sections 544, 547, 548, 549 or 550 of the Bankruptcy
Code, under other federal law or under applicable state law.
28
5. Waiver of Notice, Etc. Guarantor irrevocably waives; (a) notice of the
acceptance of this Guaranty by the Beneficiary; (b) notice of presentment,
demand for payment, non-payment and protest of any other obligation of CSM; (c)
any and all rights to notice of, or to consent to, any action that Beneficiary
may take in accordance with Section 3(a) hereof; (d) unless and until
Beneficiary shall have received indefeasible payment in full of all Obligations;
and (e) its right to demand a trial by jury in any case, action or proceeding
that involves a claim, demand, action or cause of action arising under or out
of, or otherwise relating to this Guaranty.
6. Governing Law. THIS GUARANTY SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISIONS THEREOF.
7. Jurisdiction; Venue. Any action, proceeding or claim commenced by the
Beneficiary or the Guarantor, against the other pursuant to this Guaranty must
be brought in the New York Supreme Court for the County of Nassau. Seller, the
Beneficiary and Guarantor each irrevocably and unconditionally commits to the in
person jurisdiction of such Court and waives, to the fullest extent permitted by
law, any objections which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in such court. Any claim
that any such suit, action or proceeding brought in such court has been brought
in an inconvenient forum and the right to object, with respect to any such suit,
action or proceeding brought in such court, that such court does not have
jurisdiction over the person of such party.
8. Notices: All notices to Guarantor shall be delivered by Federal Express or
other receipted, overnight delivery service as follows:
If to Guarantor:
Attn: Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxx, Xxxxx X000
Xxxxx Xxxxx, Xxx Xxxx 00000
With a copy to
Xxxxx X. Xxxxxxxxx, Esq.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
If to Beneficiary:
00 Xxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxxxxxx Xx.
Xxxxxxx Xxxxx, XX 00000
8. Final Judgment. Beneficiary and Guarantor each agrees that a final
non-appealable judgment in any such suit, action or proceeding brought
in such a court shall be conclusive and binding.
9. Successors and Assigns. This Guaranty is and shall be: binding on
Guarantor and its successors and assigns; and inure to the benefit of
each Beneficiary and their respective successors and assigns.
10. Severability. If any provision of this Guaranty shall be determined by a
court of competent jurisdiction to be unenforceable in whole or part,
then such provision shall be ineffective (but only to the extent that
such provision is unenforceable) and the balance of this Guaranty shall
be deemed valid and enforceable and construed as if the offending
provision had been omitted or deleted from this instrument.
29
11. Guarantor stipulates and agrees that it has been adequately represented
in the negotiation of this Guaranty and consequently that this Guaranty
and the terms and provisions hereof shall not be interpreted or
construed against Beneficiary.
12. Guarantor hereby represents the following to Beneficiary:
A. Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
B. Guarantor has the requisite corporate power and authority to execute and
deliver this Guaranty, and to perform its obligations hereunder. The
Board of Directors and, if necessary, the shareholders, of Guarantor
have taken all action required to authorize the execution and delivery
of this Guaranty by Guarantor, the performance of the obligations of the
Guarantor hereunder and thereunder and the consummation by Guarantor of
the transactions contemplated hereby. No other corporate proceedings on
the part of Guarantor are necessary to authorize the execution and
delivery of this Guaranty or the performance by Guarantor of its
obligations hereunder. This Guaranty constitutes the legal, valid and
binding obligation of Guarantor, enforceable against it accordance with
the terms hereof.
C. The execution, delivery and performance by the Guarantor of this
Guaranty does 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 Guarantor, (b) the
certificate of incorporation or by-laws or other organizational
documents of Guarantor or (c) any material contract, agreement or other
instrument to which Guarantor is a party or by which it is bound.
D. There is no material action pending, or to the Guarantor's knowledge
threatened, against or relating to the Guarantor or relating to the
transactions contemplated by this Guaranty that would have a material
adverse effect on its ability to satisfy the Obligations.
E. The Guarantor has funds available to satisfy the Obligations hereunder
in accordance with their terms, and Guarantor's bank has approved the
transactions contemplated hereby.
F. Except for current liabilities incurred by Guarantor directly in
connection with the operation of its businesses in the ordinary course
since January 1, 2005, Guarantor has not incurred any material debts,
liabilities or obligations of any nature or kind (whether absolute,
accrued, contingent, unliquidated or otherwise, whether due or to become
due and regardless of when asserted) arising out of transactions entered
into, at or prior to the date hereof, or any action or inaction at or
prior to the date hereof or any state of facts existing at or prior to
the date hereof and which could affect, in any material way, on
Guarantor's ability to enter into or consummate this Guaranty or perform
the Obligations hereunder.
G. 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 Guarantor in connection with the execution or
delivery by it of this Guaranty, or the performance by the Guarantor of
its obligations hereunder.
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by the
Guarantor as of the date first set forth above.
GUARANTOR: BENEFICIARY
Netsmart Technologies, Inc Addiction Management Systems, Inc
/s/ X.X. Xxxxxxxx By: /s/ Xxx Xxxxx
-------------------------- --------------------------
Name: X.X. Xxxxxxxx Name: Xxxxxx Xxxxx, M.D., President
Title: C.F.O. Title:
Sworn to before me this 17th day of June 2005
/s/ Xxxxx X. Xxxxxxx
-----------------------------
Notary Republic
30
