UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 11, 2015

SILVERSUN TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
000-50302
16-1633636
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)

5 Regent Street, Suite 520
Livingston, New Jersey 07039
(Address of principal executive offices)

(973) 758-9555
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement.
 
Asset Purchase Agreement
 
On March 11, 2015 (the “Closing Date”), SWK Technologies, Inc., a Delaware corporation (“SWK”) and wholly owned subsidiary of SilverSun Technologies, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) by and among SWK, 2000Soft, Inc. d/b/a Accounting Technology Resources, a California corporation (the “Seller” or “ATR”), and Karen Espinoza McGarrigle, owner all of the issued and outstanding capital stock of ATR.

On the Closing Date, pursuant to the terms of the Purchase Agreement, the Seller sold, transferred, conveyed and delivered to SWK all of the Acquired Assets (as defined in the Purchase Agreement) to SWK.  In consideration for the Acquired Assets, SWK (i) paid Seller $80,000 cash; (ii) issued Seller a promissory note in the principal amount of $175,000 (the “Note”).  The Note bears interest at a rate of two percent (2%) per annum, has a three year term, with the principal being amortized in thirty-six equal installments.

As additional compensation, SWK shall pay Seller ten percent of that certain sum that SWK nets from existing ATR clients for maintenance renewals.  Similarly, SWK shall pay Seller five percent of that certain sum that SWK nets for maintenance renewals between the 13 th and 24 th months following the Closing Date.

Pursuant to the Purchase Agreement, SWK assumed liability for client deposits and entered into that certain Assignment and Assumption Agreement (the “Assignment Agreement”), assume Seller’s real estate lease for the premises located at 200 East Sandpointe Avenue, Suite 560, Santa Ana, CA 92707.

Additionally, in connection with the Purchase Agreement, SWK entered into an Employment Agreement (the “Employment Agreement”) with Karen Espinoza McGarrigle pursuant to which Ms. McGarrigle will serve as an SWK ERP sales executive.  Ms. McGarrigle’s duties will focus primarily on software application sales to new and existing customers.  The term of the Employment Agreement is for three years unless otherwise terminated pursuant to the terms and conditions thereunder. SWK shall pay Ms. Garrigle $155,000 per annum.  Ms. Garrigle shall also receive 10,000 options to purchase common stock of the Company, no later than 30 days after the execution of the Employment Agreement, at a price equal to the actual closing price of the Company’s common stock on the day before the Closing Date.  The options shall vest at a rate of 20% per year over five years.

The above description of the Purchase Agreement, Note, and Employment Agreement do not purport to be complete and are qualified in their entirety by reference to such documents filed as exhibits hereto.

Item 2.01 Completion of Acquisition or Disposition of Assets

The disclosure set forth above under Item 1.01 to this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.01

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure set forth above under Item 1.01 to this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
 
 
 
 
 
Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.                      Description

 
2.1*

 
10.1*

 
10.2*

*Filed herewith

 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

     
SILVERSUN TECHNOLOGIES, INC.
           
           
Date: March 17, 2015
 
By:
/s/ Mark Meller  
       
Mark Meller
 
       
President, Chief Executive Officer and Principal Accounting Officer
 
 
 
 
 
 
Exhibit 2.1
 


 
ASSET PURCHASE AGREEMENT


by and among


SWK TECHNOLOGIES, INC.,

As Buyer


and



2000 SOFT, INC. d/b/a ACCOUNTING TECHNOLOGY RESOURCES

As Seller

and


KAREN ESPINOZA McGARRIGLE

As Stockholder





March 11, 2015
 
 
 
 
 
 
ASSET PURCHASE AGREEMENT
 
THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is dated as of March 11, 2015, by and among SWK TECHNOLOGIES, INC., a Delaware corporation, located at 5 Regent Street, Suite 520, Livingston, NJ 07039 (“ Buyer ”); and 2000SOFT, INC. d/b/a ACCOUNTING TECHNOLOGY RESOURCES, a California corporation, located at 200 East Sandpointe Avenue, Suite 560, Santa Ana, CA  92707 (“ Seller ” or “ATR”), and Karen Espinoza McGarrigle (the “ Stockholder ”), who owns all of the issued and outstanding capital stock of ATR.  Buyer, Seller, and Stockholder are sometimes each referred to separately as a “ Party ” and collectively herein as the “ Parties .”
 
W I T N E S S E T H :
 
WHEREAS, Seller is primarily engaged in the business of selling and supporting enterprise resource planning and similar software applications, for small and middle market companies in North America;
 
WHEREAS, Seller has agreed to sell certain assets to Buyer, and Buyer wishes to purchase from Seller certain assets with respect to the Business on the terms and subject to the conditions set forth in this Agreement;
 
WHEREAS, Seller desires to transfer, and Buyer is willing to assume, certain liabilities relating to the Business;
 
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.
 
ARTICLE 1
 
DEFINITIONS
 
For purposes of this Agreement, the following terms have the meanings assigned to them in this Article 1:
 
 “ Acquired Assets ” means all the following assets of the Business:
 
(a)   the Client Lists and Prospect Lists, along with all rights, benefits and privileges arising thereunder or with respect thereto which are set forth on Exhibit D attached hereto;
 
(b)   the Contracts, along with all rights, benefits and privileges arising thereunder or with respect thereto which are set forth on Section 3.07 of the Disclosure Schedule;
 
(c)   all files, correspondence, agreements and other documents relating to the Client Lists, Prospect Lists, Contracts and Intellectual Property;
 
 
 
 
 
(d)   certain tangible personal property (such as equipment and furniture) which are set forth in Section 3.10 of the Disclosure Schedule;
 
(e)   the Intellectual Property of the Business including, without limitation the Intellectual Property which is set forth in Section 3.11 of the Disclosure Schedule, including the name “ACCOUNTING TECHNOLOGY RESOURCES”. The only exclusions to this provision are the www.2000soft.com domain name, and the corporate name “2000SOFT, INC.” and all rights related thereto, which shall remain the property of ATR notwithstanding anything to the contrary herein this Agreement;
 
(f)   all goodwill of ATR and all other assets related to or used in connection with the Business so long as they are related to an Acquired Asset;
 
(g)   all deposits with ATR’s landlord, utility companies, and all other such deposits
 
(h)   all leaseholds associated with the primary business location of ATR;
 
(i)   cash equal to the unearned revenue and customer deposits of ATR shown on the balance sheet of ATR as of the Closing Date; and
 
(j)   any and all other assets of ATR, which specifically shall not include all Accounts Receivable of ATR as of the Closing Date.
 
 “ Adverse Consequences ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.
 
“ Agreement ” has the meaning set forth in the preface above.
 
“ Applicable Law ” means any constitutional provision, statute or ordinance, whether foreign, federal, state or local, applicable in the United States or any other nation, including any other law, rule, regulation, judgment, injunction, order, executive order, ruling, assessment, writ, decree or interpretation thereof of any Governmental Entity, or any common law.
 
 “ Business ”   the operation of ATR.
 
“ Business Day ” means any day other than a day that is a Saturday, Sunday or legal holiday in New York, New York.
 
“ Buyer ” has the meaning set forth in the preface above.
 
 “ Client Lists ” means any and all lists, spreadsheets, worksheets and tables of any type or form identifying each and every client and former client of ATR as of the Closing Date which are listed on Exhibit D attached hereto.
 
 
2
 
 
“ Closing ” has the meaning set forth in Section 2.05 below.
 
“ Closing Date ”   has the meaning set forth in Section 2.05 below.
 
“ Code ” means the Internal Revenue Code of 1986, as amended.
 
 “ Contracts ” means the following: (i) all employment agreements; (ii) all customer software applications and/or partner proposals containing specifications of modifications to software; (iii) all Licenses; (iv) all non-compete and non-solicitation agreements; and (v) all active leases applying to any equipment located in the offices of ATR.
 
“ Disclosure Schedule ”   has the meaning set forth in Article 3 below.
 
“ Employees ” means the employees of the Business.
 
“ Environmental Law ” means a legal rule pertaining to land use, air, soil, surface water, groundwater (including the protection, cleanup, removal, remediation or damage thereof), public or employee health or safety or any other environmental matter, including, without limitation, the following laws as the same have been amended from time to time: (i) Clean Air Act (42 U.S.C. § 7401, et seq. ); (ii) Clean Water Act (33 U.S.C. § 1251, et seq. ); (iii) Resource Conservation and Recovery Act (42 U.S.C. § 6901, et seq. ); (iv) Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq. ); (v) Safe Drinking Water Act (42 U.S.C. § 300f, et seq. ); and (vi) Toxic Substances Control Act (15 U.S.C. § 2601, et seq. ); (vii) Rivers and Harbors Act (33 U.S.C. § 401, et seq. ); together with all other legal rules regulating emissions, discharges, releases or threatened releases of any hazardous substance into ambient air, land, surface water, groundwater, personal property or structures, or otherwise regulating the manufacture, processing, distribution, use, treatment, storage, disposal, transport, discharge or handling of any hazardous substance.
 
“ Excluded Liabilities ” means all liabilities of ATR of any nature whatsoever and wherever situated not included in “Included Liabilities”, including without limitation:
 
(a)   trade accounts payable, bank lines of credit, accrued liabilities and any liabilities or obligations that should have been paid prior to the Closing Date in ATR’s ordinary course of business relating to any employee, any Plan, any employee benefits or commissions, salaries, wages or other compensation arrangements existing on or prior to the Closing Date with respect to ATR or the Business;
 
(b)   any Taxes of ATR and any other Taxes accruing on or prior to the Closing Date;
 
(c)   any liabilities relating to any current pending or threatened litigation, arbitration or any other Proceeding against ATR or any future litigation, arbitration or Proceeding relating to the Acquired Assets to the extent related to events occurring prior to the Closing Date;
 
(d)   any liabilities arising out of any violation of Environmental Law;
 
 
3
 
 
(e)   any liabilities for legal fees and expenses of ATR related to the transactions contemplated hereby.
 
“ GAAP ” means United States generally accepted accounting principles as in effect from time to time.
 
“ Governmental Entity ” shall mean any government (including any United States of foreign federal, state, provincial, cantonal, municipal or county government), any political subdivision thereof and any governmental, administrative, ministerial, regulatory, central bank, self-regulatory, quasi-governmental, taxing, executive, or legislative department, commission, body, agency, authority or instrumentality of any thereof.
 
“ Gross Margin ” shall mean the sum of gross revenue from sales related to Sage client care (maintenance) and Sage software sales on the existing clients and prospects of Seller less any discounts granted to such customers, and less commissions paid to third party, and less the cost charged to the Company by the publisher.
 
“ Included Liabilities ” shall mean the following liabilities only :
 
a.   Client deposits and
 
b.   Leasehold on 200 East Sandpointe Avenue, Suite 560, Santa Ana, CA  92707
 
“ Indemnified Party ” has the meaning set forth in Section 7.03 below.
 
“ Indemnifying Party ” has the meaning set forth in Section 7.03 below.
 
“ Intellectual Property ” means: (a) inventions (whether patentable or unpatentable and whether or not reduced to practice), improvements thereon, and patents, patent applications and patent disclosures, together with reissues, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (b) trademarks, service marks, trade dress, logos, trade names, URLs, websites, domain names and corporate names, together with translations, adaptations, derivations, and combinations thereof, and including but not limited to goodwill associated therewith, applications, registrations and renewals in connections therewith, and the rights to use the Internet domain name “http://www.ATRinc.com” and all iterations and permutations thereof, together with all logos, slogans, trademarks, and service marks relating thereto used by ATR in connection therewith; (c) copyrightable works, copyrights, and applications, registrations and renewals in connections therewith, mask works and applications, registrations and renewals in connections therewith; (d) trade secrets and confidential business information (including but not limited to research and development, know-how, formulas, compositions, manufacturing and reproductions processes and techniques, methods, schematics, technology, flowcharts, block diagrams, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals); (e) computer software (including but not limited to data related documentation); (f) copies and tangible embodiments of any of the foregoing (in whatever form or medium); and (g) licenses, sublicenses, permissions or contacts in connection with any of the foregoing.
 
 
4
 
 
“ Intellectual Property Rights ” means the rights or interest of any Person in or to any Intellectual Property.
 
“ Judicial Authority ” shall mean any court, arbitrator, special master, receiver, tribunal or similar body of any kind.
 
“ Knowledge ” means actual knowledge of a Person without being under any duty to investigate.
 
“ License ” means any agreement between ATR and end user which establishes rights under which ATR’s software application may be used.
 
 “ Material Adverse Effect ” means (i) with respect to ATR, a material adverse effect on (A) the Acquired Assets, (B) the ability of ATR to perform its obligations under this Agreement, or (C) the validity or enforceability of this Agreement, and (ii) with respect to Buyer, a material adverse effect on (A) the ability of Buyer to perform its obligations under this Agreement, or (B) the validity or enforceability of this Agreement.
 
“ Notice of Claim ” has the meaning set forth in Section 7.03.
 
“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
 
“ Party ” has the meaning set forth in the preface above.
 
“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).
 
 “ Proceeding ” shall mean any action, suit, counter-claim, arbitration, mediation, litigation, inquiry, hearing, investigation or other proceeding of any kind involving any Governmental Entity, any Judicial Authority or any other Person.
 
“ Product ” “ Product Lines ” and “ Enhancements ” means the products set forth on Schedule 2.

“Prospect Lists” means any and all lists, spreadsheets, worksheets and tables of any type or form identifying each and every prospect of ATR as of the Closing Date which are listed on Exhibit D attached hereto.

“ Purchase Price ” has the meaning set forth in Section 2.02 below.
 
“ Security Interest ” means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.
 
 
5
 
 
“ ATR ” has the meaning set forth in the preface above.
 
 “ Stockholder ” has the meaning set forth in the preface above.
 
 “ Taxes ” means (A) all income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings, profits or selected items of income, earnings or profits) and all gross receipts, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits taxes, alternative or add-on minimum taxes, customs duties and other taxes of any kind whatsoever, together with all interest and penalties, additions to tax and other additional amounts imposed by any Governmental Entity on such entity, and (B) any liability for the payment of any amount of the type described in the immediately preceding clause (A) as a result of being a “transferee” (within the meaning of Section 6901 of the Code or any other applicable law) of another entity, a member of an affiliated or combined group, a contract or otherwise.
 
“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule, exhibit or attachment thereto.
 
“ Third Party Claim ” has the meaning set forth in Section 7.03 below.
 
ARTICLE 2
 
BASIC TRANSACTION
 
Section 2.01                          Purchase and Sale of Assets .  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the Closing in consideration of the payments by Buyer of the Purchase Price, plus such other amounts, as specified below in Section 2.02, and Buyer shall further assume all of the Included Liabilities, as specified below in Section 2.04.
 
Section 2.02                          Purchase Price .  Payments shall be made (the “ Purchase Price ”) in accordance with the following:
 
(i)   On or before March 11, 2015, Buyer shall pay ATR the sum of $80,000 cash;
 
(ii)   On the Closing Date, Buyer shall issue ATR a Promissory Note, in form noted in Exhibit A attached hereto, in the amount of $175,000.  The Note shall bear interest at two percent (2%) per annum, and shall have a three (3) year term.  Principal shall be amortized in thirty-six (36) equal installments; and
 
 
6
 
 
(iii)   As additional consideration, Buyer shall pay to Seller, for the first twelve (12) months following the Closing Date, ten percent (10%) of that sum that Buyer nets from existing ATR clients for payments made for maintenance renewals.  Similarly, Buyer shall pay to Seller five percent (5%) of that sum that Buyer nets from existing ATR clients for payments made for maintenance renewals in the timeframe between the thirteenth (13 th ) and twenty-fourth (24 th ) months following the Closing Date.  For purposes of this clause only, “net,” in the plural and the singular, is d efined as gross revenues to the company for Sage Software maintenance renewals less the cost charged by Sage to the reseller for such maintenance renewals. No other such payments shall be due or owing after the twenty four (24) month anniversary of the Closing Date.
 
Section 2.03                          [Intentionally deleted]
 
Section 2.04                          Assumption of Liabilities .  As further consideration for the sale of Acquired Assets, Buyer shall, without any further responsibility or liability of, or recourse to, Seller, or any of Seller’s directors, shareholders, officers, employees, agents, consultants, representatives, affiliates, successors or assigns, absolutely and irrevocably assume and be solely liable and responsible for the Included Liabilities. Buyer shall not assume or have responsibility for any other liabilities of any type whatsoever.
 
Section 2.05                          Closing .  The Closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place on or before March 11, 2015, at the offices of Lucosky Brookman LLP, located at 101 Wood Avenue South, Woodbridge, New Jersey 08830.  The date on which the Closing occurs is referred to herein as the (“ Closing Date ”) and the Closing shall be deemed effective as of 12:00 a.m. New York time on the day immediately following the Closing Date.
 
Section 2.06                          Deliveries at the Closing .  At the Closing, (i) ATR will deliver to Buyer the various certificates, instruments, and documents referred to in Section 6.01 below; (ii) Buyer will deliver to Seller the various certificates, instruments, and documents referred to in Section 6.02 below; (iii) Seller will execute, acknowledge (if appropriate), and deliver to Buyer (A) a bill of sale in the form attached hereto as Exhibit B , (B) an assignment and assumption agreement in the form attached hereto as Exhibit C , and (C) such other instruments of sale, transfer, conveyance and assignment as Buyer and its counsel reasonably may request; (iv) Buyer will execute, acknowledge (if appropriate), and deliver to Seller (A) an assignment and assumption agreement in the form attached hereto as Exhibit C , and (B) such other instruments of assumption as Seller and its counsel reasonably may request; (v) the Parties shall make payments and deliveries in accordance with Section 2.02 herein.
 
Section 2.07                          Allocation .  The Parties agree to allocate the Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) in accordance with Section 2.02 herein, and the Parties shall make all necessary filings (including those under Section 1060 of the Code) in accordance with such allocation.
 
Section 2.08                          Transfer of ATR’s 401-k plan. The assets and balance in the ATR 401-k plan shall be transferred and rollover to Buyer’s 401-k plan in place at the time of this Agreement, all in accordance with applicable state and federal law.  Nothing herein shall be construed as a waiver of any rights or interests held by ATR employees or former employees.
 
 
7
 
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF SELLER AND ATR
 
ATR and Stockholder represent and warrant, jointly and severally, to Buyer that the statements contained in this Article 3 are correct and complete as of the date hereof and as of the Closing Date, except as set forth in the disclosure schedule accompanying this Agreement or any amendments (or deemed amendments thereto) (the “ Disclosure Schedule ”). Seller represents and warrants to Buyer that to Seller’s knowledge, the statements contained solely in Section 3.02, Section 3.03, and Section 3.04 are correct and complete as of the Closing date except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in sections corresponding to the lettered and numbered sections contained in this Article 3.
 
Section 3.01                          Organization of ATR .  ATR is a corporation or other business entity duly organized, validly existing, and in good standing under the laws of the jurisdiction of State of California.  ATR has all requisite corporate power and authority to carry on the businesses in which it is engaged, to carry on the Business proposed to be conducted by the Buyer and to own and use the properties owned and used by it.  ATR has delivered to Buyer correct and complete copies of ATR’s charter and bylaws (as amended to date).
 
Section 3.02                          Authorization of Transaction; Enforceability .  ATR and Stockholder have the power and authority necessary to execute and deliver this Agreement and to perform its obligations hereunder.  The execution and delivery of this Agreement has been duly authorized by all necessary corporate, stockholder or other action by ATR.  This Agreement has been duly executed and delivered by ATR and Stockholder.  This Agreement constitutes the valid and legally binding obligations of ATR and Stockholder, enforceable in accordance with its terms and conditions, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).
 
Section 3.03                          Noncontravention .  To Seller’s knowledge, neither the execution and the delivery of this Agreement (including the documents referred to in Section 2.06 above), nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, Governmental Entity, or court to which Seller or Stockholder are subject or any provision of the charter, bylaws or other organizational documents of ATR or Stockholder, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract, lease, license, instrument, or other arrangement to which ATR or Stockholder is a party or by which it is bound or to which any of the Acquired Assets is subject (or result in the imposition of any Security Interest upon any of the Acquired Assets).
 
 
8
 
 
Section 3.04                          Brokers’ Fees .  To Seller’s knowledge, ATR and Stockholder have no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer could become liable or obligated.
 
Section 3.05                          Client Lists .  To Seller’s knowledge, Exhibit D attached hereto contains a complete and correct list of each Client List, as amended, including the date of such Client List and each amendment thereto.  With respect to each Client List, to Seller’s knowledge:
 
(a)   each Client List is a true, accurate, and complete listing of each and every former client of ATR since inception of the Business;
 
(b)   there are no material disputes or threatened disputes with any Person listed on the Client List;
 
Section 3.06                          Events Subsequent to December 31, 2014 .  To Seller’s knowledge, since December 31, 2014,  (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Material Adverse Effect.  Without limiting the generality of the foregoing, since that date there has not been any:
 
(a)   declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock;
 
(b)   creation, incurrence or assumption of any indebtedness (including obligations in respect of capital leases); assumption, guaranty, endorsement or other creation of liability or responsibility (whether directly, contingently or otherwise) for the obligations of any other person or entity; or made any loans, advances or capital contributions to, or investments in, any other person or entity;
 
(c)   commitment to make any capital expenditure in excess of $3,000;
 
(d)   damage, destruction or loss, whether or not covered by insurance;
 
(e)   waiver by ATR of a right or of debt owed to it;
 
(f)   satisfaction or discharge of any encumbrance or payment of any obligation by ATR not in the ordinary course of business consistent with past practice and in an aggregate amount exceeding $1,000;
 
(g)   labor dispute, other than routine individual grievances, or any activity or proceeding to organize any employees of the Business, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees;
 
(h)   change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or payment of or agreement (written or oral) to pay, conditionally or otherwise, any bonus, incentive, retention or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any, director, officer, employee, consultant or agent, or new employment, compensation or deferred compensation agreement (or any amendment of any such existing agreement);
 
 
9
 
 
(i)   initiation, receipt or settlement of any Proceeding or action affecting ATR or otherwise material to the Business;
 
(j)   act to (i) accelerate the billing of any customers of ATR or the collection of any Accounts Receivable of ATR, (ii) delay the payment of any accounts payable or accrued expenses of ATR or (iii) defer any expenses of ATR; or
 
(k)   any agreement, whether oral or written, fixed or contingent, by ATR to do any of the foregoing.
 
Section 3.07                          Contracts .    Seller represents and warrants that ATR has delivered complete and accurate copies of each Contract to the Buyer.  With respect to each Contract:
 
(a)   each Contract is the legal, valid, binding and enforceable obligation of ATR, and is in full force and effect with respect to ATR.
 
(b)   Each Contract will continue to be legal, valid, binding, enforceable by Buyer, and in full force and effect immediately following the Closing in accordance with the terms that are in effect immediately prior to the Closing;
 
(c)   ATR is in material compliance with the terms and conditions of each Contract;
 
(d)   there are no material disputes or threatened disputes with any Person under any Contract;
 
(e)   To the Seller’s knowledge, no party is in breach or default, and no event has occurred which with notice or lapse of time or both would constitute a breach or default, or permit termination, modification, or acceleration, under such Contract;
 
(f)   no Person has provided ATR with notice that it intends to terminate any Contract;
 
(g)   to the extent insurance is required under the terms of such Contract, ATR is in compliance with such requirements.
 
Section 3.08                          Litigation .  ATR or the Business is not (i) subject to any outstanding injunction, judgment, order, decree, ruling, or charge, or (ii) a party to or threatened to be made a party to any Proceeding.
 
(a)   Stockholder is not subject to any Proceeding relating to the Business that could reasonably have a Material Adverse Effect on the Business or is reasonably likely to affect the legality, validity or enforceability of this Agreement or any of the transactions contemplated hereby.
 
 
10
 
 
Section 3.09                          Warranties .  Except to provide support services in the Ordinary Course of Business neither the software licensed nor the services delivered by ATR are subject to any guaranty or, warranty; and there is no right of return, right of credit or other indemnity, except with respect to infringement of third-party intellectual property rights, breach by the ATR of its obligations under a Contract or as otherwise set forth herein.  ATR does not know of any reason why such expenses should significantly increase as a percentage of sales in the future.
 
Section 3.10                          Title to Tangible Personal Property .  Section 3.10 of the Disclosure Schedule lists the material tangible personal property of the Business which is used regularly in the Business.  Except as set forth in Section 3.10 of the Disclosure Schedule, Seller has good title to, or a valid leasehold interest in, such tangible assets free of any Security Interests.  All personal tangible property of the Business is freely assignable by Seller to Buyer. Buyer shall not be obligated to remove any tangible personal property from the premises of ATR.
 
Section 3.11                          Intellectual Property.
 
(a)   Section 3.11 of the Disclosure Schedule contains a complete and accurate list of all of the material Intellectual Property owned, used or held for use by ATR in the conduct of its Business and there is no other Intellectual Property owned, used or held for use by ATR material to the conduct of its Business.  Such Intellectual Property is the only Intellectual Property necessary to operate the Business materially as it is currently operated.
 
(b)   Neither ATR nor the license or other use of any Intellectual Property not previously owned by ATR included in the Acquired Assets has to ATR’s knowledge violated or infringed, and currently does not violate or infringe, upon the Intellectual Property of any Person.  ATR has not been a defendant in any action, suit, investigation or proceeding relating to, or otherwise has been notified of, any alleged claim of infringement of any other Person’s Intellectual Property, which Proceedings are still active, and ATR has no outstanding Proceedings for (or any knowledge of) any continuing infringement of Intellectual Property by any other Person.
 
(c)   ATR (i) is the sole and exclusive owner of, with all right, title and interest in and to (free and clear of any Security Interests), any and all Intellectual Property owned by it included in the Acquired Assets, (ii) has rights to the use of all such Intellectual Property used by it pursuant to license, sublicense, agreement, or permissions and, except as set forth in Section 3.11 of the Disclosure Schedule, is not contractually obligated to pay any compensation or grant any rights to any third party in respect thereof and (iii) has the right to require the application of any such Intellectual Property previously owned by ATR that constitutes an application for registration, including but not limited to all patent applications, trademark application service mark applications, copyright applications and mask work applications, and to transfer ownership to Buyer of the application and of the registration once it issues.
 
(d)   To Seller’s knowledge, ATR has kept secret and has not disclosed the source code for any Intellectual Property previously owned by ATR to any Person other than in the Ordinary Course of Business to persons who are subject to the terms of a binding confidentiality agreement with respect thereto.  To Seller’s knowledge, ATR has taken all appropriate measure to protect the confidential and proprietary nature of any Intellectual Property previously owned by ATR including without limitation the use of confidentiality agreements with all of its employees or other persons having access to any source and object codes.
 
 
11
 
 
(e)   To Seller’s knowledge, any and all Intellectual Property previously owned by ATR included in the Acquired Assets that are registrations, including but not limited to all registered patents, trademarks, service marks, copyrights and masks works, are valid and subsisting and in full force and effect.
 
(f)   ATR has not granted any licenses to or other rights in any Intellectual Property included in the Acquired Assets to any Person; to ATR’s knowledge, no Person is currently using such Intellectual Property except in connection with the Business.
 
(g)   The execution, delivery and performance by Seller and Stockholder of this Agreement and the consummation of the transactions contemplated hereby and thereby shall not alter or impair or result in the loss of any rights or interests of Seller in any Intellectual Property included in the Acquired Assets owned by Seller or as to which Seller obtains any consent to the transactions contemplated hereby and all such Intellectual Property shall be owned or available for use by Buyer on identical terms and conditions immediately subsequent to the Closing.
 
(h)   To Seller’s knowledge, none of the Intellectual Property previously owned by ATR included in the Acquired Assets, if any, is subject to any outstanding order or agreement restricting in any manner the use of licensing thereof by ATR.
 
(i)   To Seller’s knowledge, except as set forth in Section 3.11 of the Disclosure Schedule, all of the Intellectual Property used in the Business is freely assignable to Buyer.
 
Section 3.12                          Disclosure .  No (i) representation or warranty by ATR or Stockholder contained in this Agreement or any certificate, or (ii) any statement contained in the Disclosure Schedule delivered to Buyer by or on behalf of ATR pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading.
 
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES OF BUYER.
 
Buyer represents and warrants to Seller that the statements contained in this Article 4 are correct and complete as of the Closing Date.
 
Section 4.01                          Organization of Buyer .  Buyer is a Delaware corporation duly incorporated, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.
 
 
12
 
 
Section 4.02                          Authorization of Transaction .  Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder.  The execution and delivery of this Agreement has been duly authorized by all necessary action by Buyer.  This Agreement has been duly executed and delivered by Buyer.  This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).  Buyer shall provide Seller and Stockholder either (a) its Bylaws authorizing this transaction contemplated by this Agreement; or (b) its Board of Director Minutes authorizing this transaction contemplated by this Agreement.  Buyer represents and warrants that it has not within the two (2) years preceding this Agreement, contemplated or explored the filing of a bankruptcy petition on its behalf, and presently has not plan nor intention of doing so.
 
Section 4.03                          Noncontravention .  Neither the execution and the delivery of this Agreement (including the documents referred to in Section 2.06 above), nor the consummation of the transactions contemplated hereby and thereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject or any provision of the organizational documents of Buyer or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets is subject. Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to enter into or perform its obligations under this Agreement.
 
Section 4.04                          Brokers’ Fees .  Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which ATR could become liable or obligated.
 
Section 4.05                          No Other Representations and Warranties .  Except as set forth in this Agreement, Buyer makes no other representation or warranty, express or implied, with respect to any of the transactions contemplated by this Agreement, with respect to Buyer, or with respect to any other matter whatsoever.
 
Section 4.06                          Transition .  Immediately after the date hereof, Buyer and Stockholder will develop a joint client communication program, under which (among other things) Stockholder will make introductions to customers of the Business and assist in responding to any questions raised, and will encourage customers of the Business to move and maintain their business to Buyer and to consent as necessary to the transfer to Buyer of the Contracts and Client Lists, as applicable.  Neither ATR nor Stockholder will take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of ATR from maintaining the same business relationships with Buyer after the Closing as it maintained with ATR prior to the Closing.  Seller and Stockholder will refer all customer inquiries relating to the Business to Buyer after the Closing.
 
 
13
 
 
ARTICLE 5
 
POST-CLOSING COVENANTS
 
Section 5.01                          General .  In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as the other Party reasonably may request, at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefore under Article 7 below).
 
Section 5.02                          Litigation Support .  In the event and for so long as any Party actively is contesting or defending against any Proceeding in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Business, the other Party will cooperate with the contesting or defending Party and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefore under Article 7 below).
 
Section 5.03                          Proprietary Information .  From and after the Closing, neither ATR nor Stockholder shall, either directly or indirectly (including through an Affiliate), disclose to any third party or make use of (except as required by law or to pursue their rights, under this Agreement), any information or documents of a confidential nature concerning ATR, the Business, the Acquired Assets or the Buyer or its business, except to the extent that such information or documents shall have become public knowledge other than through improper disclosure by ATR or Stockholder or any of their Affiliates.
 
Section 5.04                          Solicitation and Hiring .  For a period of two years after the Closing Date, neither ATR nor Stockholder shall, so long as Buyer is not in default under the Promissory Note, either directly or indirectly (including through an Affiliate), (a) solicit or attempt to induce any Employee of Buyer to terminate his employment with Buyer or any Affiliate of Buyer or (b) hire or attempt to hire any Employee of Buyer.
 
Section 5.05                          Non-Solicitation .  ATR along with Stockholder personally agree that in the event Stockholder’s employment is terminated by Buyer, for the two (2) year period to commence on the date of Espinoza’s last day of employ with Buyer, ATR and Stockholder agree to the following: (i) ATR and Stockholder shall not solicit any individual or entity set forth on the Client Lists; and (ii) ATR and Stockholder shall not solicit in any way any of Buyer’s employees or contractors.  Notwithstanding the foregoing, this two (2) year non-solicitation agreement shall have no force and effect if Buyer is in default under the Promissory Note.
 
Section 5.06                          Apportionment .  If ATR or Stockholder, or any of their Affiliates receive any amounts in payment of obligations owed to Buyer, including, but not limited to, payments owed to Buyer in respect of the Acquired Assets, then the receiving party shall promptly deliver or pay them over to Buyer. Also, within sixty (60) days following the Closing Date, Buyer and Seller shall exchange a reconciliation of all deposits, security or customer accounts in which funds are held as of the Closing Date.  The purpose is to account for and pay out any unresolved credits or liabilities in existence as of the Closing Date. For the purpose of example only, this refers to prepaid time on projects, customer deposit accounts with unearned revenue, prepaid support, and security held pursuant to lease. Liability for all remaining ATR payroll liabilities, such as earned but unpaid vacation, shall remain with, and be paid out by Seller.
 
 
14
 
 
Section 5.07                          Alternate Forms of Asset Transfer .
 
Buyer shall undertake performance of any obligation contained in the Acquired Assets, in ATR’s stead, and, if any such obligation cannot be assigned without the consent of a third party which shall not have been obtained, Buyer’s undertaking shall constitute a sub-contract of ATR’s obligation or other kind of arrangement between Buyer and ATR, if any, pursuant to which Buyer can undertake such performance (and receive the benefit thereof) without such third party’s consent; or if no such arrangement shall exist, Buyer shall nonetheless perform such obligation, unless the third party shall expressly reject Buyer’s performance, in which case, Buyer shall be released of the undertaking with respect to such obligation, and ATR  shall be liable for any damages that the third party shall establish that it suffered and indemnify Buyer and hold Buyer harmless with respect thereto.  The exception to this term, however, shall be with respect to the remaining obligation on ATR’s present leasehold interest in the event its landlord rejects the assignment of ATR’s current property lease to Buyer, in which case, Buyer shall pay all obligations under the lease regardless of whether it is assigned to Buyer or not so long as Buyer may occupy the leasehold space.
 
Section 5.08                           Left blank intentionally
 
Section 5.09                          Left blank intentionally
 
Section 5.10                          Certain Tax Considerations.
 
(a)   All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with the sale of the Acquired Assets (including any real property transfer Tax and any similar Tax) shall be borne and paid by Buyer, when due, and Buyer will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges.
 
(b)   Buyer shall take all actions required to comply with all bulk sales laws, including publication of any applicable notice in California, which may be applicable to the transactions contemplated herein, including, without limitation, the timely filing of any required Tax Returns.
 
(c)   For the avoidance of doubt, except as otherwise set forth in this Section 5.09, ATR shall be responsible for the filing of all Tax Returns and the payment of all Taxes (whether or not shown on such returns) with respect to ATR, the Acquired Assets and the Business for all periods up to and including the Closing Date and all such Taxes shall be Excluded Liabilities.
 
 
15
 
 
ARTICLE 6
 
CONDITIONS TO OBLIGATION TO CLOSE
 
Section 6.01                        Conditions to Obligation of Buyer .  The obligation of Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
 
(a)   (i) the representations and warranties set forth in Article 3 above, shall be true and correct in all material respects, and (ii) all agreements and covenants contained in this Agreement shall have been performed or complied with by ATR, in each case, at and as of the Closing Date;
 
(b)   Seller shall have delivered to Buyer a certificate to the effect that each of the conditions specified above in Section 6.01(a) is satisfied in all respects;
 
(c)   Seller shall have delivered to Buyer the bill of sale and assignment and assumption agreement required under Section 2.06, together with any other instrument of transfer necessary to convey to Buyer all of the Acquired Assets, which instruments shall be reasonably satisfactory in form and substance to Buyer;
 
(d)   there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;
 
(e)    Buyer shall have delivered to Seller and Stockholder either (a) its Bylaws, or (b) its Board of Director Minutes, authorizing the transaction contemplated by this Agreement; and
 
(f)   Buyer shall have received duly executed UCC-3 termination statements and such other release and termination instruments (or copies thereof) as the Buyer shall reasonably request in order to vest all right, title and interest in and to the Acquired Assets free and clear of all Security Interests.
 
Buyer may waive any condition specified in this Section 6.01 if it executes a writing so stating at or prior to the Closing.
 
Section 6.02                        Conditions to Obligation of Seller .  The obligation of Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
 
(a)   (i) the representations and warranties set forth in Article 4 above shall be true and correct in all material respects and (ii) all agreements and covenants contained in this Agreement shall have been performed or complied with by Buyer, in each case, at and as of the Closing Date;
 
(b)   Buyer shall have delivered to Seller a certificate to the effect that each of the condition specified above in Section 6.02(a) is satisfied in all respects;
 
 
16
 
 
(c)   Buyer shall have delivered to Seller the items required under Section 2.06, together with any other instruments necessary to acquire right, title and interest in and to the Acquired Assets and to assume liability and responsibility for the Included Liabilities, which instruments shall be reasonably satisfactory in form and substance to Seller;
 
(d)   there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;
 
(e)   ATR shall have timely filed any and all required Tax Returns necessary to comply with all bulk sales laws which may be applicable to the transactions contemplated herein
 
Seller may waive any condition specified in this Section 6.02 if it executes a writing so stating at or prior to the Closing.
 
ARTICLE 7
 
REMEDIES FOR BREACHES OF THIS AGREEMENT.
 
Section 7.01                        Survival .  All of the representations, warranties and covenants contained in this Agreement, and the Exhibits and Disclosure Schedule attached hereto shall survive the Closing and remain in full force and effect until the first anniversary of the Closing Date.
 
Section 7.02                        Indemnification.
 
(a)   ATR and Stockholder agrees to indemnify, defend and hold harmless Buyer, its Affiliates and, if applicable, their respective directors, managers, officers, shareholders, members, partners, employees, attorneys, accountants, agents and representatives and their heirs, successors and assigns from and against any and all Adverse Consequences based upon, arising out of or otherwise in respect of (i) any inaccuracy in or any breach of any representation, warranty or covenant of ATR or Stockholder contained in this Agreement, and (ii) any Adverse Consequences Buyer shall suffer from, or any Third Party Claim, arising out of or in connection with, the Business, the Acquired Assets prior to the Closing Date.
 
(b)   Buyer agrees to indemnify, defend and hold harmless ATR, Stockholder, and their Affiliates and, if applicable, their respective directors, managers, officers, shareholders, members, partners, employees, attorneys, accountants, agents and representatives and their heirs, successors and assigns from and against any and all Adverse Consequences based upon, arising out of or otherwise in respect of (i) any inaccuracy in or any breach of any representation, warranty or covenant of Buyer contained in this Agreement, and (ii) any Adverse Consequences ATR shall suffer from, or any Third Party Claim, arising out of or in connection with, the Business or the Acquired Assets after the Closing Date, which shall specifically include the remaining obligation on ATR’s present leasehold interest in the event its landlord rejects the assignment of ATR’s current property lease to Buyer.
 
(c)   The obligations to indemnify and hold harmless pursuant to paragraphs (a) and (b) of this Section 7.02 shall survive the consummation of the transactions contemplated hereby for the period set forth in Section 7.01, except for claims for indemnification asserted prior to the end of such period, which claims shall survive until final resolution thereof.
 
 
17
 
 
(d)   Each of Buyer and ATR agree that any legal fees and expenses that result from a meritorious claim made under this Article 7 that is not a Third Party Claim shall be paid by the Indemnifying Party.
 
(e)   In no event shall indemnification obligations set forth in this Section 7.02 exceed an amount equal to the Purchase Price.
 
Section 7.03                        Matters Involving Third Parties.
 
(a)   If any Party entitled to be indemnified pursuant to Section 7.02 (an “ Indemnified Party ”) receives notice of the assertion of any claim in respect of Adverse Consequences (a “ Third Party Claim ”), such Indemnified Party shall give the party who may become obligated to provide indemnification hereunder (the “ Indemnifying Party ”) written notice describing such claim or fact in reasonable detail (the “ Notice of Claim ”) promptly (and in any event within ten (10) Business Days after receiving any written notice from a third party).  The failure by the Indemnified Party to timely provide a Notice of Claim to the Indemnifying Party shall not relieve the Indemnifying Party of any liability, except to the extent that the Indemnifying Party is prejudiced by the Indemnified Party’s failure to provide timely notice hereunder.
 
(b)   In the event any Indemnifying Party notifies the Indemnified Party within ten (10) Business Days after the Indemnified Party has provided a Notice of Claim that the Indemnifying Party is assuming the defense thereof: (i) the Indemnifying Party will defend the Indemnified Party against the matter with counsel of its choice, subject to the consent of the Indemnified Party; (ii) the Indemnified Party may retain separate co-counsel at its sole cost and expense (except that the Indemnifying Party will be responsible for the fees and expenses of the separate co-counsel to the extent the Indemnified Party reasonably concludes that the counsel the Indemnifying Party has selected has a conflict of interest); (iii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the matter without the written consent of the Indemnifying Party; and (iv) the Indemnifying Party will not consent to the entry of any judgment with respect to the matter, or enter into any settlement which does not include a provision whereby the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect thereto.
 
(c)   In the event the Indemnifying Party does not notify the Indemnified Party within ten (10) Business Days after the Indemnified Party provides the Indemnifying Party with a Notice of Claim that the Indemnifying Party is assuming the defense thereof, then the Indemnified Party shall have the right, subject to the provisions of this Article, to undertake the defense, compromise or settlement of such claim for the account of the Indemnifying Party.  Unless and until the Indemnifying Party assumes the defense of any claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys’ fees and other costs and expenses incurred in connection with the defense of any such action or proceeding.  Each Indemnified Party shall agree in writing prior to any such advance that, in the event it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that it was not entitled to indemnification under this Article 7.
 
 
18
 
 
(d)   In the event that the Indemnifying Party undertakes the defense of any claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith.
 
ARTICLE 8
 
EMPLOYEES OF THE BUSINESS
 
Section 8.01                        No Obligations to Employees .  Except as provided in this Agreement, ATR shall be solely responsible for all obligations it may have with respect to all Employees of ATR, and Buyer shall not assume ATR’s obligations with respect to ATR’s Employees.
 
Section 8.02                        Commission Payments Owed By Seller .  Buyer shall not be responsible for any outstanding commission payments due to Employees for the period prior to the Closing. Stockholder and ATR represent and agrees that the payment of such commissions is an obligation of Stockholder and ATR. Stockholder further represents that it shall, on the Closing Date, pay Employees any and all outstanding commission amounts due ATR.
 
ARTICLE 9
 
MISCELLANEOUS
 
Section 9.01                        Press Releases and Public Announcements .  Commencing on the Closing Date, Buyer may issue any press release or make any public announcement relating to the subject matter of this Agreement. Seller and Stockholder are precluded at all times from issuing any press release or making any public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyer.
 
Section 9.02                        No Third-Party Beneficiaries .  This Agreement shall not confer any rights or remedies upon any Person other than the Parties, the Indemnified Parties and their respective successors and permitted assigns.
 
Section 9.03                        Entire Agreement .  This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof.
 
Section 9.04                        Succession and Assignment .  This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns.  No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; p rovided, however , that Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder).
 
 
19
 
 
Section 9.05                        Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
 
Section 9.06                        Headings .  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
 
Section 9.07                        Notices .  Any notice or other communications hereunder must be in writing and shall be deemed to have been duly given and received on the day on which it is served by personal delivery upon the party for whom it is intended, on the third Business Day after it is mailed by registered or certified mail, return receipt requested, on the Business Day after it is delivered to a national courier service addressed to the party for whom it is intended, or on the Business Day on which it is sent by telecopier; provided, that the telecopy is promptly confirmed by telephone confirmation thereof, to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person:
 
To Buyer:
 
SWK Technologies, Inc.
5 Regent Street, Suite 520
Livingston, New Jersey 07039
Telephone: (973) 758-6110
Attention: Jeffrey D. Roth

With copies to:

Lucosky Brookman, LLP
33 Wood Avenue South, 6 th Floor
Iselin, New Jersey 08830
Telephone: (732) 395-4400
Attention: Joseph M. Lucosky, Esq.
 
To ATR and Stockholder:

2000Soft, Inc. dba Accounting Technology Resources
200 Sandpointe Ave
Suite 560
Santa Ana, CA 92707
 
 
20
 

With copies to:

Law Offices of Richard Rudolph
2082 Michelson Drive, Suite 212
Irvine, CA 92612
 
Section 9.08                        Governing Law.
 
(a)   This Agreement shall be governed by and construed in accordance with the domestic laws of the State of New Jersey without giving effect to any choice or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Jersey.
 
(b)   Any judicial proceeding brought with respect to this Agreement by Stockholder and/or ATR or the Buyer  must be brought in the United States District Court in the State of New Jersey or any court of competent jurisdiction in the State of New Jersey located in Middlesex County; and, each Party: (i) accepts unconditionally, the exclusive jurisdiction of such courts and any related appellate court, and agrees to be bound by any final, non-appealable judgment rendered thereby in connection with this Agreement; and (ii) irrevocably waives any objection it may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum; provided , however , that such consent to jurisdiction is solely for the purpose referred to in this Section and shall not be deemed to be a general submission to the jurisdiction of said Courts or the State of  New Jersey other than for such purpose.
 
(c)   THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF, RELATED TO OR IN CONNECTION WITH THIS AGREEMENT.
 
Section 9.09                        Amendments and Waivers .  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and ATR.  No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
 
Section 9.10                        Severability .  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
 
 
21
 
 
Section 9.11                        Expenses .  Each of ATR, Stockholder and Buyer will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.
 
Section 9.12                        Construction .  Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” shall mean including without limitation.  The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Personal pronouns, when used in this Agreement, whether in the masculine, feminine or neuter gender, shall include all other genders, and the singular, shall include the plural, and vice versa.
 
Section 9.13                        Incorporation of Exhibits and Schedules .   The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
 
Section 9.14                        No Breach of Fiduciary Duty Required .  Nothing in this Agreement shall require, or be construed to require ATR or Stockholder to take any action or omit to take any action that would be a breach of its fiduciary duties under any agreement to which it is a party or under Applicable Law or which would otherwise be contrary to applicable law.  Without limiting the generality of the foregoing, nothing herein shall require ATR or Stockholder to exercise its discretion to provide any consent or other authorization on behalf of any other Person for which it acts in a fiduciary capacity if such consent or authorization is within its discretion in such fiduciary capacity.  The Parties shall cooperate in good faith to avoid any such breach of fiduciary duties or applicable laws while preserving the overall economic terms of this Agreement and the benefits intended to be provided to the respective Parties hereunder.
 
Section 9.15                        Enforcement.   If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs, and expenses.
 
/ / /
 
/ / /
 
/ / /
 
 
 
22
 
 
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as of the date first above written.
 

SWK TECHNOLOGIES, INC.



By:  _______________________________
Jeffrey D. Roth
         Chief Executive Officer


2000 SOFT, INC. d/b/a ACCOUNTING TECHNOLOGY RESOURCES



By:  ________________________________
Karen Espinoza McGarrigle
President
 

STOCKHOLDER

 
                                                                                                                                                                                            
Karen Espinoza McGarrigle
 
 
 
 
 
23
 
Exhibit 10.1
 
 
EMPLOYMENT AGREEMENT
 
This employment agreement, (the “Agreement”) is made on March, 1, 2015 by and between SWK TECHNOLOGIES, INC., a Delaware corporation (hereinafter referred to as “SWK” or the “Company”), having its primary offices at 5 Regent Street, Suite #520, Livingston, NJ 07039 and Karen Espinoza McGarrigle, currently residing at ___________________ (hereinafter referred to as the "Executive").
 
W I T N E S E T H :
 
WHEREAS , Executive possesses certain knowledge and skills relating to the Company’s business that the Company wishes to obtain for the development and success of the Company’s business.
 
WHEREAS, the Company desires to engage the services of the Executive, and the Executive desires to render such services;
 
NOW, THEREFORE, in consideration of the premises, the parties agree as follows:
 
1.   Employment.   The Company hereby employs the Executive as an ERP Sales Executive   and the Executive hereby accepts such employment, subject to the terms and conditions hereinafter set forth.
 
2.   Term.   The term of the Executive's employment hereunder shall commence on March 1, 2015 (the “Commencement Date”) and shall continue through March 1, 2018 (the “Term”) unless such Term is earlier terminated in accordance with the provisions of this Agreement.
 
3.   Duties.   The Executive agrees that she will serve the Company on a full-time basis faithfully and to the best of her ability, subject to the general supervision of the Chief Executive Officer (“CEO”) or his designee(s) and/or the Board of Directors of the Company.  The Executive’s duties will vary, but will focus primarily and initially on software application sales to new named customers as well as existing customers; there will also be a small degree of executive customer management responsibilities. The Executive agrees that she will not, during the term of this Agreement, engage in any other business activity which interferes with the performance of her obligations under this Agreement and Executive will devote all of her working time to the business and affairs of the Company; provided, however, that the foregoing shall not be construed as precluding the Executive from: (i) serving on the Board of Directors of any corporation or entity not directly competitive or competitive in any material respect with the Company; and (ii) investing or trading in securities or other forms of investments, in each case, so long as such activities do not materially interfere with the performance of the Executive’s duties hereunder and such investments do not represent the ownership of five percent (5%) or more of the capital stock of publicly traded entities.    Performance of Executive’s duties hereunder shall in no event require that Executive relocate from her current residence.  The Executive’s primary office location shall be 200 East Sandpointe Avenue, Suite 560, Santa Ana, CA  92707.
 
 
 
 
 
4.  Compensation.
 
(a)   In consideration of the services to be rendered by the Executive hereunder, the Company agrees to pay the Executive, and the Executive agrees to accept, a Base Salary in the amount of One Hundred Fifty Five Thousand Dollars ($155,000) per annum, subject to all required federal, state and local payroll deductions.  Currently, the Company pays its executives on a bi-weekly basis.
 
(b)   The Executive shall be issued 10,000 stock options of the parent company of the Company no later than 30 days after the execution of this Agreement. The stock options shall be issued at a price equal to the actual closing price of the parent company’s common stock on the day before the date of actual closing of the acquisition of the assets of Accounting Technology Resources by the Company.  The options shall vest at the rate of 20% per year over five years.
 
(c)   The Executive may also be entitled to incentive compensation, however there shall be no incentive compensation earned by the Executive nor paid by the Company during the first 120 days of employment. Further, Executive is not guaranteed any incentive compensation. The CEO or his designee will set reasonable goals in connection with the incentive component, which will generally be based on the overall growth and profitability of the Company, individual or team sales performance, or any combination of these variables. The CEO or his designee shall discuss with the Executive the specific goals in connection with the first year’s incentive compensation at approximately one hundred twenty (120) days from the Commencement Date.  The CEO or the COO shall make the final determination as to what those goal(s) are.  The goals shall be memorialized in writing and made a part of this Agreement.  The incentive compensation goals, if any, for the second year of this Agreement shall be similar in nature and scope to those described above and shall be discussed with the Executive, although the CEO or the COO shall make the final determination as to what those goal(s) are.  In order to receive incentive compensation, as set forth in this Paragraph, Executive must be employed on the date(s) payments are scheduled to be made.
 
(d)   The Executive shall be entitled to twenty (20) Paid Time Off (“PTO”) days during each calendar year.  The Executive shall only be permitted to carry forward a maximum of ten (10) PTO days from the prior calendar year.  Any remaining days will be forfeited. The Company shall not be obligated to pay the Executive for any unused or lost PTO days, although the Company, in its sole discretion, may choose to pay the Executive for unused PTO days in lieu of providing the Executive with time off.
 
(e)   The Executive shall be entitled to Company holidays in accordance with the Company’s Employee Handbook, as amended and as published periodically by the Company.
 
(f)   The Executive shall receive group medical and dental benefits for herself and her spouse at no cost to the Executive. The Executive shall also receive qualified retirement benefits, group disability insurance and group life insurance, as per the Employee Handbook, and in accordance with the Company’s standard practices.
 
 
 
 
 
(g)   To the extent that the Executive becomes mentally or physically disabled, as determined in accordance with Paragraph 10 of this Agreement, Executive shall continue to receive her total compensation and other benefits hereunder until the termination of this Agreement pursuant to Paragraph 10 hereof; provided, however, that the Executive’s Base Salary shall be reduced by any disability benefits Executive receives from policies maintained and paid for by the Company.  Moreover, Executive is required to exhaust all accrued but unused PTO in connection with any such absence due to disability.
 
(h)   At the discretion of the Company’s Board of Directors, the Executive will also be eligible for periodic cash and/or stock bonuses.
 
5.   Business Expenses.
 
Executive is authorized to incur, and the Company shall pay and reimburse her, for all reasonable and necessary business expenses incurred in the performance of her duties hereunder, in accordance with guidelines adopted by the Board of Directors.  The Company will pay and reimburse Executive for all such reasonable expenses upon the presentation by Executive, from time to time, of an itemized account of such reasonable expenditures and proper documentation thereof as evidence that such expenses have been incurred. The determination of what is fair and reasonable shall be made by the CEO or COO.
 
6.  Termination by the Company for Cause.
 
The Company has the right to terminate Executive’s employment with cause. Termination by the Company of the Executive’s employment for cause (hereinafter referred to as “Termination for Cause), shall mean termination upon:
 
(i)   the willful and continued failure by the Executive to substantially perform the Executive’s material duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board or the CEO, which demand specifically identifies the material duties that the Board believes that the Executive has not substantially performed, and reasonable opportunity to cure; or
 
(ii)   the willful engaging by the Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise; or
 
(iii)    the conviction of the Executive of a felony, or that results in the Executive being unable to substantially carry out her duties as set forth in this Agreement; or
 
(iv)   the commission of any act by the Executive against the Company that constitutes the embezzlement, larceny, and/or grand larceny.
 
 
 
 
 
7.  Termination by the Company Without Cause.    If the Company terminates Executive’s employment other than for Cause pursuant to Paragraph 6, or on account of death or disability pursuant to Paragraphs 9 or 10, the Company shall pay or provide the Executive, within thirty (30) days of the date of termination, with: (i) any unpaid salary earned under this Agreement prior to the date of termination; (ii) any accrued but unused PTO days prior to the date of termination; (iii) any unpaid compensation due under Paragraph 4 (b) herein; (iv) any unpaid expense reimbursement owed to him for periods through the date of termination; and (v) the Executive’s Base Salary for the remainder of the Term.
 
8 . Termination by the Executive.      The Executive may terminate her employment hereunder for “Good Reason,” within ninety (90) days of the occurrence of any of the following events: (i) a significant and material breach of this Agreement by the Company; (ii) any failure to pay, within a reasonable amount of time, any part of the Executive’s compensation (including Base Salary and variable compensation, if any) or to provide the benefits contemplated herein; or (iii) Company’s breach of the Asset Purchase Agreement executed concurrently herewith.  The Executive shall give the Company written notice of any proposed termination for Good Reason and the Company shall have thirty (30) days from receipt of such written notice to cure any ground of termination for Good Reason, as set forth in this Paragraph.  In the event of Termination by Executive for Good Reason, Company shall be obligated to pay to Executive that compensation due as if Company had terminated Executive Without Cause pursuant to Paragraph 7 of this Agreement.
 
9. Termination Due to Death.      In the event of the Executive’s death during the Term of this Agreement, the Executive’s employment hereunder shall immediately and automatically terminate, and the Company shall have no further obligation or duty to the Executive or her estate or beneficiaries other than monies owed to Executive under Paragraph 7(i), (ii), (iii) and (iv).

10. Termination Due to Disability.      The Company may terminate the Executive’s employment hereunder, upon written notice to the Executive, in the event that the Executive becomes disabled during the Term.  The term “disabled” is defined as any condition of either a physical or psychological nature that, even with reasonable accommodation, renders the Executive unable to perform the essential functions of the services contemplated hereunder for a period of one hundred eighty (180) days during any twelve (12) month period during the Term.  Executive represents that any period of disability beyond one hundred eighty (180) days would place an undue burden and hardship on the Company.   Any such termination shall become effective upon mailing or hand delivery of such notice to the Executive. The Company shall have no further obligation or duty to the Executive following termination under this Paragraph, other than to pay Executive all earned compensation and benefits through the date of termination, and other than as required by applicable law.  In addition, Executive will be entitled to the lesser of (i) an additional six (6) month’s Base Salary or (ii) Executive’s Salary through the end of the Term, following any such termination, to be paid pursuant to the Company’s normal payroll cycle.  For purposes of determining the existence or nonexistence of a disability, the Executive and Company shall mutually agree to a physician.  If the Executive and Company are unable to agree on a physician, the physicians selected by each shall agree on a third physician, who shall make the disability determination.
 
 
 
 
 
11. Non-Disclosure of Confidential Information and Non-Competition   This provision shall be governed by the terms and conditions of that certain, Non-Compete/Non-Disclosure/Non-Solicitation Agreement, dated as of the date hereof and attached as Exhibit A hereto.
 
12. Successors; Binding Agreement.
 
Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive, nor shall it be subject to attachment, execution, pledge or hypothecation, but this Agreement if Executive shall die shall inure to the benefit of and be enforceable by the Executive’s personal or legal representative, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive dies during the term of this Agreement before a notice of termination is sent by either party, no amounts shall be paid to Executive’s devisee, legatee or other designee or, if there is no such designee, to Executive’s estate other than the amounts owed under Section 4(h) and under Section 7(i), (ii), (iii) and (iv).  If Executive dies after a notice of termination has been submitted, by either party, the Agreement shall terminate according to the notice of termination and the relevant sections of this Agreement pertaining to such a termination rather than as a termination under this Section.
 
13. Miscellaneous.   No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive, and such officer as may be specifically designated by the Board.  No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that is not set forth in this Agreement.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law.
 
14. Severance and Validity.   The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
 
15. Counterparts.   This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
 
16. Entire Agreement.   This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, supersedes any prior agreement between the parties, and may not be changed or terminated orally.  No change, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party to be bound; provided, however, that the Executive’s compensation and benefits may be changed at any time by the Company without in any way affecting any of the other terms and conditions of this Agreement, which in all other respects shall remain in full force and effect.  Notwithstanding anything contained herein to the contrary, Executive’s Base Salary cannot be negatively changed by the Company unless mutually agreed upon.
 
 
 
 
 
17. Negotiated Agreement.   This Agreement has been negotiated and shall not be construed against the party responsible for drafting all or parts of this Agreement.
 
18. Notices.   For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or received by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Executive at the Executive’s home address set forth in the Company’s records and to the Company at the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
 
19. Governing Law and Resolution of Disputes.   All matters concerning the validity and interpretation of and performance under this Agreement shall be governed by the laws of the State of New Jersey.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Newark, New Jersey in accordance with the rules of the American Arbitration Association (“AAA”) then in effect.  Arbitration will take place before a single experienced employment arbitrator licensed to practice law in New Jersey and selected in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association.  The arbitrator may not modify or change this Agreement in any way.  Any judgment rendered by the arbitrator as above provided shall be final and binding on the parties hereto for all purposes and may be entered in any court having jurisdiction.  In any arbitration pursuant to this Paragraph 19, the fees and expenses of the arbitrator shall be paid by the Company.  Except as otherwise set forth herein this Paragraph 19, if any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs, and expenses.  Executive agrees that the cost provisions of this Paragraph are fair and not unconscionable.  Nothing in this Paragraph 19 shall be construed to limit the Company’s ability to seek injunctive and other relief in connection with an actual or threatened violation of Paragraph 11 hereof.
 
 
 
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of March 1, 2015.
 
SWK TECHNOLOGIES, INC.
 

 
By: Jeffrey D. Roth, CEO                                                                March 1, 2015

 
EXECUTIVE:
 

______________________________                                      March 1, 2015
Karen Espinoza McGarrigle
 
 
 
 
 
 
EXHIBIT A
 
NON-COMPETE/NON-DISCLOSURE/NON-SOLICITATION AGREEMENT
 
Exhibit 10.2
 
 
US $175,000.00
March 11, 2015
Livingston, New Jersey
 
PROMISSORY NOTE
 
 
FOR VALUE RECEIVED, the undersigned, SWK TECHNOLOGIES, INC., a corporation incorporated under the laws of the State of Delaware (the “Borrower”), hereby promises to pay to the order of 2000 SOFT, INC. d/b/a Accounting Technology Resources, a California corporation (the “Note Holder”), or as it may otherwise direct, no later than the Maturity Date (as defined below), the unpaid principal amount of the loan (the “Loan”) made by the Note Holder to the Borrower on the date hereof, as evidenced hereby, in the principal amount of One Hundred Seventy Five Thousand Dollars (US $175,000.00). The Borrower hereby promises to pay interest on the unpaid principal amount of the Loan on the dates and at the rate provided for herein.

SECTION 1   .   Certain Terms Defined .   The following terms for all purposes of this Promissory Note shall have the respective meanings specified below.
 
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized by law to close.
 
“Collections” means, with respect to any asset, all cash collections, distributions, payments and other cash Proceeds in respect of such asset, including, without limitation, all Proceeds from any sale of disposition of such asset.
 
“Default” means any event which, with the giving of notice, lapse of time, determination of materiality or fulfillment of any other applicable condition (or any combination of the foregoing), would constitute an Event of Default.
 
“Event of Default” has the meaning given to it in Section 6.
 
“Maturity Date” means the date that is thirty-six (36) months following execution hereof, on which date the Loan, together with all outstanding interest, shall be paid in full.
 
“Person” means and includes any natural person, individual, partnership, joint venture, corporation, trust, Limited Liability Company, limited company, joint stock company, unincorporated organization, government entity or any political subdivision or agency thereof, or any other entity.
 
“Proceeds” shall have, with reference to any asset or property, the meaning assigned to it under the UCC and, in any event, shall include, but not be limited to, any and all amounts from time to time paid or payable under or in connection with such asset or property.
 
“UCC” means the Uniform Commercial Code, as from time to time in effect in the applicable jurisdictions.
 
 
 
 
 
SECTION 2   .   Payments Due Under Promissory Note.   Borrower shall pay Note Holder the sum of Five Thousand Twelve and 45/100 Dollars (US $5,012.45) per month, on the first day of each month, until the amount due hereunder is paid in full.  The initial payment shall be due and payable on March 1, 2015.
 
SECTION 3   .   Interest Payments .   The unpaid principal amount of the Loan shall bear interest at a rate per annum equal to two percent (2.00%).  Such interest shall be payable on the Maturity Date.
 
Any overdue principal of or interest on the Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10.00%) (the “Default Rate”).
 
Interest shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).
 
SECTION 4   .   Optional Prepayments .   The Borrower may prepay the Loan in whole or in part at any time without penalty by paying the principal amount to be prepaid together with interest accrued thereon to the date of prepayment.
 
SECTION 5   .   General Provisions as to Payments .   The payment of principal of and interest on the Loan by the Borrower hereunder shall be made not later than 12:00 Noon (New York City time) on the due date of each payment by cashier’s check or by wire transfer of immediately available funds to the Note Holder’s account at a bank in the United States specified by the Note Holder in writing to the Borrower without reduction by reason of any set-off or counterclaim.
 
SECTION 6   .   Events of Default .   Each of the following events shall constitute an “Event of Default”:
 
a.  
the principal or interest of the Loan shall not be paid within five (5) Business Days of the date that such interest was due;
 
b.  
a court shall enter a decree or order for relief in respect of the Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Borrower for any substantial part of the property of the Borrower or ordering the winding up or liquidation of the affairs of the Borrower, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; and
 
c.  
the Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Borrower or for any substantial part of the property of the Borrower, or the Borrower shall make any general assignment for the benefit of creditors
 
 
 
 
 
If an Event of Default shall occur, the unpaid principal and accrued interest on the Loan shall become immediately due and payable without any declaration or other act on the part of the Note Holder.  Immediately upon the occurrence of any Event of Default the Note Holder, without any notice to the Borrower, which notice is expressly waived by the Borrower, may proceed to protect, enforce, exercise and pursue any and all rights and remedies available to the Note Holder under this Promissory Note and any and all rights and remedies available to the Note Holder at law or in equity.
 
SECTION 7   .   Further Assurances .  The Borrower hereby agrees that, from time to time upon the written request of the Note Holder, the Borrower will execute and deliver such further documents and do such other acts and things as the Note Holder may reasonably request in order to fully effect the purposes of this Promissory Note and to protect and preserve the priority and validity of the security interests granted hereunder.
 
SECTION 8   . Rights and Remedies .   (a) The Note Holder shall have all of the rights and remedies of an unsecured party under applicable laws.
 
SECTION 9   .   Notices .   All notices, requests, demands and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission, electronic transmission or similar writing) and shall be given to such party at the address, facsimile number or email address set forth below or at such other address or facsimile numbers as such party may hereafter specify for the purpose by notice to each other party hereto.  Any notice sent by facsimile or electronic transmission shall be confirmed by letter dispatched as soon as practicable thereafter.
 
If to the Borrower:
 
SWK Technologies, Inc.
5 Regent Street, Suite #520
Livingston, NJ  07039
Facsimile No.: 973-758-6120
Telephone No.:973-758-6100
Email: jeff.roth@swktech.com
Attention: Jeffrey D. Roth
 
If to the Note Holder:
 
2000 Soft, Inc. d/b/a Accounting Technology Resources
200 East Sandpointe Avenue, Suite #560
Santa Ana, CA  92707
Facsimile No.: 949-699-1776
Telephone No.: 949-699-1777
Email: karen@teamacctech.com
Attention: Karen Espinoza McGarrigle

 
 
 
 
Every notice or other communication shall, except so far as otherwise expressly provided by this Guaranty, be deemed to have been received (provided that it is received prior to 2 p.m. local time; otherwise it shall be deemed to have been received on the next following Banking Day) (i) if given by facsimile or electronic transmission, on the date of dispatch thereof (provided further that if the date of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent, it shall be deemed to have been received on the next following Banking Day in such locality) or (ii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.
 
SECTION 10   .   Powers and Remedies Cumulative; Delay or Omission Not Waiver of Event of Default .    No right or remedy herein conferred upon or reserved to the Note Holder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
 
No delay or omission of the Note Holder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any Event of Default or an acquiescence therein; and every power and remedy given by this Promissory Note or by law may be exercised from time to time, and as often as shall be deemed expedient, by the Note Holder.
 
SECTION 11   .   Transfers .   The parties may not transfer or assign this Promissory Note nor any right or obligation hereunder to any person or entity without the prior written consent of the other party.
 
SECTION 12   .   Modification .   This Promissory Note may be modified only with the written consent of both the Borrower and the Note Holder.
 
SECTION 13   .   Expenses .  The Borrower agrees to pay to the Note Holder all out-of-pocket expenses (including reasonable expenses for legal services of every kind) of, or incident to, the enforcement of any of the provisions of this Promissory Note.
 
SECTION 14   .   Miscellaneous .   This Promissory Note shall be deemed to be a contract under the laws of the State of New Jersey, and for all purposes shall be construed in accordance with the laws of said state without regard to conflict of law principles.  The parties hereto hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of or any default under this Promissory Note, except as specifically provided herein, and assent to extensions of the time of payment, or forbearance or other indulgence without notice.  The Section headings herein are for convenience only and shall not affect the construction hereof.  Any provision of this Promissory Note which is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity, prohibition or unenforceability without invalidating or impairing the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.  This Promissory Note shall bind the Borrower and his or her heirs, administrators, executors, personal representatives and permitted assigns.  The rights under and benefits of this Promissory Note shall inure to the Note Holder and its successors and assigns.
 
[signature page follows]
 
 
 
 
 
IN WITNESS WHEREOF, the Borrower has caused this instrument to be duly executed on the date indicated below.
 
 
Date:  March 11, 2015
 
 
SWK Technologies, Inc.
 
 
By: __________________________
Name:  Jeffrey D. Roth
Title:    Chief Executive Officer