AGREEMENT AND PLAN OF MERGER

dated as of September 20, 2005
by and among

CMHC SYSTEMS, INC.,

HAYES ACQUISITION CORP.,

and

NETSMART TECHNOLOGIES, INC.

and

Solely in the capacity of, and for the Limited Purpose of Serving as, the
Security Holders’ Representative

JOHN PATON

 
 

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TABLE OF CONTENTS

Page

     
ARTICLE I
PRINCIPAL TERMS OF MERGER
1
     
1.1
The Merger
1
1.2
Closing
1
1.3
Effective Time
2
1.4
Articles of Incorporation and Code of Regulations
2
1.5
Directors and Officers
2
1.6
Effects of the Merger
2
1.7
Further Assurances
3
     
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
3
     
2.1
Status and Conversion of Securities
3
2.2
Exchange of Certificates
6
2.3
Distributions With Respect to Unexchanged Shares
8
2.4
Transfers of Ownership
8
2.5
No Further Ownership Rights in CMHC Shares
8
2.6
Lost, Stolen or Destroyed Certificates
8
2.7
No Liability
9
2.8
Intentionally Left Blank
9
2.9
Escrow
9
2.10
Payment of Shareholder Expenses
9
2.11
Withholding Rights
10
     
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CMHC
11
     
3.1
Organization and Authority
11
3.2
Subsidiaries
11
3.3
Authorization of Agreements
11
3.4
Capital Stock
11
3.5
No Conflicts
12
3.6
Financial Statements
12
3.7
Taxes
13
3.8
No Adverse Changes
14
3.9
Conduct of Business
15
3.10
Title to Assets
16
3.11
Real Property
16
3.12
Inventory
17
3.13
Accounts Receivable
17
3.14
Material/Service Agreements; Other Contracts
17
3.15
Government Contracts
19
3.16
Intellectual Property
21

 
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3.17
Customer and Supplier Relationships
23
3.18
Employees
23
3.19
Employee and Labor Relations
24
3.20
Benefit Plans
25
3.21
Litigation; Compliance; Permits
27
3.22
Environmental Compliance
28
3.23
Absence of Material Liabilities
29
3.24
Corporate Records
29
3.25
Bank Accounts; Power of Attorney
29
3.26
Warranties
29
3.27
Brokers, Finders, etc
29
3.28
Absence of Certain Business Practices
30
3.29
Insurance
30
3.30
Information Technology
30
3.31
Related Party Transactions
31
3.32
Sales Order Backlog
31
3.33
Change of Control Payments
31
3.34
Net Working Capital
31
3.35
Disclosure
31
     
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NETSMART AND ACQUISITION
31
     
4.1
Organization and Authority
32
4.2
Authority for Agreements
32
4.3
Capital Stock
32
4.4
No Conflicts
33
4.5
Litigation
33
4.6
Brokers, Finders, etc
34
4.7
Provisions for Merger Consideration
34
4.8
SEC Reports and Financial Statements
34
4.9
Absence of Changes
35
4.10
Disclosure
35
     
ARTICLE V
COVENANTS AND AGREEMENTS
35
     
5.1
Covenants and Agreements of CMHC
35
5.2
Covenants and Agreements of Netsmart and Acquisition
40
5.3
Other Covenants and Agreements
40
5.4
Shareholders Voting Agreement
42
5.5
Net Working Capital Adjustment
42
5.6
Public Announcements
45
5.7
Indemnification; Directors’ and Officers’ Insurance
45

 
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ARTICLE VI
CONDITIONS PRECEDENT
46
     
6.1
Conditions to Obligations of Netsmart and Acquisition
46
6.2
Conditions to Obligations of CMHC
48
     
ARTICLE VII
DEFINITIONS
49
     
7.1
Definition of Certain Terms
49
     
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION, TAX MATTERS
61
     
8.1
Survival of Representations and Warranties
61
8.2
Survival of Covenants and Agreements
61
8.3
Indemnification by Securities Holders
61
8.4
Indemnification by Netsmart
62
8.5
Procedure - Third-Party Claims
63
8.6
Procedure - Other Claims
64
8.7
Remedies
64
8.8
Certain Limitations
64
8.9
Calculation of Damages
65
8.10
Satisfaction of Indemnification Obligations; Escrow Fund; Reimbursement Fund
66
8.11
Tax Indemnification and Other Matters
66
8.12
Knowledge
68
     
ARTICLE IX
SECURITIES HOLDERS’ REPRESENTATIVE
68
     
9.1
Appointment
68
9.2
Powers and Authority
69
9.3
Authorization
69
9.4
Indemnification of Securities Holders’ Representative
71
9.5
Access to Information
71
9.6
Reasonable Reliance
72
9.7
Attorney-in-Fact
72
9.8
Liability
72
9.9
Orders
73
9.10
Removal or Resignation of Securities Holders’ Representative; Authority of
Successor Securities Holders’ Representative
73
9.11
Expenses of Securities Holders’ Representative
74
9.12
Irrevocable Appointment
75
9.13
Netsmart’s Reliance
75
9.14
Binding Appointment
75
     
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
75
     
10.1
Termination
75
10.2
Notice of Termination; Effect of Termination
76

 
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ARTICLE XI
MISCELLANEOUS
76
     
11.1
Governing Law; Jurisdiction and Venue
76
11.2
Waiver of Jury Trial
77
11.3
Severability
77
11.4
Notices
77
11.5
Waiver
78
11.6
Assignment
79
11.7
General Construction Principles
79
11.8
Third Parties
79
11.9
Enforcement Rights of Securities Holders
79

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of September 20, 2005,
by and among CMHC SYSTEMS, INC., an Ohio corporation (“CMHC”), HAYES ACQUISITION
CORP., an Ohio corporation (“Acquisition”), and NETSMART TECHNOLOGIES, INC., a
Delaware corporation (“Netsmart”) and solely in the capacity of, and for the
limited purpose of serving as, the Securities Holders’ Representative, John
Paton.

W I T N E S S E T H :

WHEREAS, upon the terms and conditions set forth herein, Netsmart, Acquisition
and CMHC each desires that Acquisition be merged with and into CMHC, with CMHC
being the surviving corporation after such merger (the “Merger”).

WHEREAS, the respective Boards of Directors of Netsmart, Acquisition and CMHC
have each determined that the Merger is advisable and in the best interests of
their respective shareholders and thus accordingly have approved this Agreement
and the Merger.

WHEREAS, concurrently with the execution and delivery of this Agreement, and as
a condition and inducement to the willingness of Netsmart and Acquisition to
enter into this Agreement, the Significant Shareholder (as defined herein) is
entering into the Shareholders Voting Agreement (as defined herein), pursuant to
which, among other things, the Significant Shareholder has agreed to vote to
adopt this Agreement and to take certain other actions in furtherance of the
Merger.

NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and conditions contained herein, and in order to set forth
the terms and conditions of the Merger and the mode of carrying the same into
effect, the parties hereto agree as follows:
ARTICLE I
PRINCIPAL TERMS OF MERGER
1.1 The Merger.

Upon the terms and subject to the conditions of this Agreement, at the Effective
Time (as defined in Section 1.3 hereof), Acquisition shall be merged with and
into CMHC in accordance with the General Corporation Law of the State of Ohio
(the “OGCL”). At the Effective Time, the separate existence of Acquisition shall
cease and CMHC shall continue as the surviving corporation in the Merger (the
“Surviving Corporation”). Acquisition and CMHC are sometimes referred to herein
as the “Constituent Corporations”. As a result of the Merger, the outstanding
shares of capital stock and the treasury shares of the Constituent Corporations
shall be converted or cancelled in the manner provided in Article II.
 
1.2 Closing. 

(a) Unless this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Article X, and subject to the
satisfaction or waiver (where applicable) of the conditions set forth in
Article VI, the closing of the transactions provided for in this Agreement (the
“Closing”) shall take place in the offices of Kramer, Coleman, Wactlar &
Lieberman, PC, at 10:00 a.m., local time, on a date to be specified by the
parties, which shall be no later than the fifth business day after satisfaction
or (to the extent permitted by Applicable Law) waiver of the conditions set
forth in Article VI (other than any such conditions which by their nature cannot
be satisfied until the Closing, which shall be required to be so satisfied or
(to the extent permitted by Applicable Law) waived at the Closing), unless
another date, time or place is agreed to in writing by the parties hereto (the
“Closing Date”).

 
 

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(b) Subject to the provisions of Article VI hereof, at the Closing, Acquisition
and CMHC shall execute a certificate of merger (the “Certificate of Merger”) and
cause such Certificate of Merger to be filed in accordance with the applicable
provisions of the OGCL.
 
1.3 Effective Time.

The Merger shall become effective when the Certificate of Merger is filed with
the Secretary of State of the State of Ohio (the “Secretary of State”) as
provided in Section 1701.81 of the OGCL. The Certificate of Merger shall be
submitted for filing as soon as practicable on the Closing Date. The date and
time when the Merger shall become effective are herein referred to as the
“Effective Time.”
 
1.4 Articles of Incorporation and Code of Regulations.

The Articles of Incorporation and Code of Regulations (the “Regulations”) of
Acquisition shall be the Articles of Incorporation and Regulations of the
Surviving Corporation from and after the Effective Time, until thereafter
amended as provided by law; provided, however, that the Articles of
Incorporation of the Surviving Corporation shall be amended so that the name of
Surviving Corporation shall be Netsmart Ohio, Inc..
 
1.5 Directors and Officers.

The directors and officers of Acquisition immediately prior to the Effective
Time shall be the directors and officers of Surviving Corporation at the
Effective Time, in each case until their respective successors are duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation’s Articles of Incorporation and
Regulations. Immediately after the Effective Time, Netsmart and the Surviving
Corporation shall cause the individuals listed on Schedule 1.5 to be elected to
the offices of Surviving Corporation listed on such Schedule until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation’s Articles of Incorporation and Regulations.

1.6 Effects of the Merger. 

Subject to the foregoing, the effects of the Merger shall be as provided in the
applicable provisions of the OGCL.

 
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1.7 Further Assurances.

Each party hereto will, either prior to or after the Effective Time, execute
such further documents, instruments, deeds, bills of sale, assignments and
assurances and take such further actions as may reasonably be requested by one
or more of the others to consummate the Merger, to vest the Surviving
Corporation with full right and title to, and, as applicable, possession of, all
assets, properties, privileges, rights, immunities, authority and franchises of
either of the Constituent Corporations or to effect the other purposes of this
Agreement.
 
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
 
2.1 Status and Conversion of Securities.

At the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof:

(a) Conversion of Acquisition Shares. Each issued and outstanding common share,
$.001 par value, of Acquisition (“Acquisition Common Shares”) shall be converted
into and become one fully paid and nonassessable common share, without par
value, of the Surviving Corporation (“Surviving Corporation Common Shares”).
Each certificate representing outstanding Acquisition Common Shares shall at the
Effective Time represent an equal number of Surviving Corporation Common Shares.

(b) Cancellation of Treasury Shares. Any CMHC Shares held by CMHC as treasury
shares shall be cancelled and retired.

(c) Exchange Ratio for CMHC Shares. (i) Each then issued and outstanding CMHC
Share remaining at the Effective Time (other than CMHC Shares to be cancelled in
accordance with Section 2.1(b) and other than Dissenting Shares (as defined in
Section 2.1(d))) shall be converted into the right to receive (A) an amount in
cash equal to the Cash Consideration per share, (B) that number of shares of
Netsmart Common Stock equal to the Stock Consideration per share and (C) the
Contingent Net Working Capital Distribution per share. The aggregate Cash
Consideration, the aggregate Stock Consideration and the aggregate Contingent
Net Working Capital Distribution are hereinafter sometimes referred to
collectively as the “Merger Consideration”. No fraction of a share of Netsmart
Common Stock will be issued by virtue of the Merger, but, in lieu thereof, each
holder of CMHC Shares who would otherwise be entitled to a fraction of a share
of Netsmart Common Stock (after aggregating all fractional shares to be received
by such holder) shall receive from Netsmart a number of shares of Netsmart
Common Stock rounded up or down to the nearest whole share. If between the date
of this Agreement and the Effective Time, Netsmart shall split, combine or
otherwise reclassify any capital stock of Netsmart, or pay a stock dividend or
other stock distribution in any shares of capital stock of Netsmart, or
otherwise change the capital stock of Netsmart into other securities, or make
any other such stock dividend or distribution in respect of the capital stock of
Netsmart, the Stock Consideration shall be correspondingly adjusted to reflect
such action; provided, that no such adjustment shall be made upon the issuance
of Netsmart Common Stock in connection with an offering of such securities at
not less than the then fair market value of such securities or as described in
Schedule 2.1(c), the issuance of any stock options, warrants or other securities
convertible into Netsmart Common Stock with exercise prices at not less than the
then fair market value of the Netsmart Common Stock or as described in Schedule
2.1(c) or upon the issuance of Netsmart Common Stock upon the exercise of such
convertible securities.

 
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(ii) Each issued and outstanding CMHC Share (other than shares to be canceled in
accordance with Section 2.1(b)) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive either (x) the Merger
Consideration per share, upon the surrender of such certificate in accordance
with Section 2.2, without interest, subject to any applicable withholding tax,
or (y) payment of fair cash value thereof for Dissenting Shares, upon the proper
exercise thereof, as defined in Section 2.1(d).

(d) Dissenting Shares. (i) Notwithstanding anything in this Agreement to the
contrary, as and to the extent required by the OGCL, each outstanding CMHC Share
that is held of record by a holder who has properly exercised dissenters’ rights
with respect thereto under Section 1701.85 of the OGCL (a “Dissenting Share”),
shall automatically be canceled but shall not be converted into or represent the
right to receive the Merger Consideration pursuant to Section 2.1(c), but the
holder thereof shall be entitled to receive such payment of the fair cash value
of such CMHC Share from the Surviving Corporation as shall be determined
pursuant to Section 1701.85 of the OGCL; provided, however, that if any such
holder shall have failed to perfect or shall withdraw or lose such holder’s
rights under Section 1701.85 of the OGCL, each such holder’s CMHC Shares shall
thereupon be deemed to have been converted as of the Effective Time into the
right to receive the Merger Consideration, without any interest thereon,
pursuant to Section 2.1(c).

(ii) CMHC shall give Netsmart (x) prompt notice of any written demands for
payment of the fair cash value of CMHC Shares, withdrawals of such demands and
any other instruments delivered pursuant to Section 1701.85 of the OGCL and (y)
the opportunity to jointly participate with CMHC in all negotiations and
proceedings with respect to demands for payment under Section 1701.85 the OGCL.
CMHC will not voluntarily make any payment with respect to any demands delivered
to CMHC pursuant to Section 1701.85 and will not, except with the prior written
consent of Netsmart, settle or offer to settle any such demands.

(e) CMHC Stock Options. (i) Subject to paragraph (ii) below, as of the Effective
Time, each outstanding option to acquire CMHC Shares (the “CMHC Stock Options”)
granted under any agreement with CMHC, whether or not then exercisable, shall be
cancelled by CMHC and in consideration of such cancellation, the holder thereof
shall be entitled to receive in respect of each CMHC Share that is the subject
of such option (A) the excess of the Option Cash Consideration per share over
the per share exercise price of such option and (B) the Contingent Net Working
Capital Distribution per share. At the Closing, Netsmart shall cause to be
deposited with the Payment Agent an amount of cash equal to the aggregate amount
due to the holders of cancelled options under Section 2.1(e)(i)(A) minus the
product of (1) the aggregate number of CMHC Shares that were the subject of such
cancelled options and (2) the Cash Consideration Per Share Reduction Amount,
together with instructions that such cash be distributed on the Closing Date or
within one business day following the Effective Time to the holders of such
cancelled options in accordance with this Section 2.1(e). Netsmart shall cause
the Contingent Net Working Capital Distribution, if any, to be distributed to
the holders of the cancelled options after the Effective Time at the same time
as that portion of the Merger Consideration is distributed to the holders of the
converted CMHC Shares. In addition, the holders of the cancelled options shall
be entitled from time to time to receive in respect of each CMHC Share that was
the subject of such cancelled options that portion of the Holdback Per Share
Amount as and when such portion is to be distributed in accordance with the
Escrow Agreement.

 
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(ii) After the date of this Agreement and prior to the Closing Date, CMHC shall
use its commercially reasonable efforts and otherwise take all actions
reasonably necessary to cause the holders of CMHC Stock Options to execute and
deliver Option Cancellation Agreements, pursuant to which such holder will agree
to the cancellation of the CMHC Stock Options as provided for in this
Section 2.1(e) and to the appointment of the Securities Holders’ Representative
as such holder’s agent, with such power, authority, rights and obligations as
described in Article IX of this Agreement.

(f) CMHC Stock Warrants. (i) Subject to paragraph (ii) below, as of the
Effective Time, each outstanding warrant to acquire CMHC Shares (the “CMHC Stock
Warrants”) granted under any agreement with CMHC, whether or not then
exercisable, shall be cancelled by CMHC and in consideration of such
cancellation, the holder thereof shall be entitled to receive in respect of each
CMHC Share that is the subject of such warrant (A) the excess of the Cash
Consideration per share over the per share exercise price of such warrant, (B)
that number of shares of Netsmart Common Stock equal to the Stock Consideration
per share and (C) the Contingent Net Working Capital Distribution per share. At
the Closing, Netsmart shall cause to be deposited with the Payment Agent an
amount of cash equal to the aggregate amount due to the holders of cancelled
warrants under Section 2.1(f)(i)(A) minus the product of (1) the aggregate
number of CMHC Shares that were the subject of such cancelled warrants and (2)
the Cash Consideration Per Share Reduction Amount. At the Closing, Netsmart
shall also cause to be deposited with the Payment Agent the aggregate number of
shares of Netsmart Common Stock due to the holders of cancelled warrants under
Section 2.1(f)(i)(B), together with instructions that such cash, if any, and
stock be distributed on the Closing Date or within one business day following
the Effective Time to the holders of such cancelled warrants in accordance with
this Section 2.1(f). Netsmart shall cause the Contingent Net Working Capital
Distribution, if any, to be distributed to the holders of the cancelled warrants
after the Effective Time at the same time as that portion of the Merger
Consideration is distributed to the holders of the converted CMHC Shares. In
addition, the holders of the cancelled warrants shall be entitled from time to
time to receive in respect of each CMHC Share that was the subject of such
cancelled warrants that portion of the Holdback Per Share Amount as and when
such portion is to be distributed in accordance with the Escrow Agreement.

(ii) After the date of this Agreement and prior to the Closing Date, CMHC shall
use its commercially reasonable efforts and otherwise take all actions
reasonably necessary to cause the holders of CMHC Stock Warrants to execute and
deliver Warrant Exchange Agreements, pursuant to which such holder will agree to
the cancellation of the CMHC Stock Warrants as provided for in this
Section 2.1(f) and to the appointment of the Securities Holders’ Representative
as such holder’s agent, with such power, authority, rights and obligations as
described in Article IX of this Agreement.

 
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2.2 Exchange of Certificates.

(a) Payment Agent. At the Closing, Netsmart shall deposit with American Stock
Transfer & Trust Company (the “Payment Agent”), (i) a cash amount equal to the
product of (x) the aggregate number of the issued and outstanding CMHC Shares
entitled to receive Cash Consideration under Section 2.1(c)(i)(A) and (y) the
difference between the amount of the Cash Consideration per CMHC Share and the
Cash Consideration Per Share Reduction Amount and (ii) that number of shares of
Netsmart Common Stock equal to be product of (x) the aggregate number of the
issued and outstanding CMHC Shares entitled to receive Stock Consideration under
Section 2.1(c)(i)(B) and (y) the Stock Consideration. Such cash and stock shall
be held for the benefit of and distributed to the holders of the converted CMHC
Shares in accordance with this Section 2.2. If the Merger Consideration includes
a Contingent Net Working Capital Distribution, that portion of the Merger
Consideration shall not be deposited with the Payment Agent at the Closing, but
Netsmart shall deposit with the Payment Agent the aggregate amount of the
Contingent Net Working Capital Distribution at such time as such amount is
determined in accordance with this Agreement. The Payment Agent shall agree to
hold such funds (such funds, together with funds deposited with the Payment
Agent pursuant to Section 2.1(e) and 2.1(f), and together with any earnings
thereon, being referred to herein as the “Payment Fund”) for delivery as
contemplated by this Article II and upon such additional terms as may be agreed
upon by the Payment Agent, CMHC and Netsmart. If the Payment Fund is invested at
the direction of Netsmart then, if for any reason (including losses) the Payment
Fund is inadequate to pay the amounts to which Securities Holders shall be
entitled, Netsmart and the Surviving Corporation shall in any event remain
liable, and shall make available to the Payment Agent additional funds, for the
payment thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement.

(b) Exchange Procedures. (i) Netsmart will use its reasonable efforts to cause
provision to be made for each holder of record of CMHC Certificates whose shares
are converted pursuant to Section 2.1(c) into the right to receive the Merger
Consideration (x) to procure, on or before the Closing Date, a letter of
transmittal and instructions and (y) to deliver in person immediately after the
Effective Time such letter of transmittal and CMHC Certificates in exchange for
that portion of the Merger Consideration that is deposited with the Payment
Agent for each CMHC Share represented by such CMHC Certificates. As soon as
reasonably practicable after the Effective Time but in any event not later than
three business days thereafter, Netsmart shall cause the Payment Agent to mail
to each holder of CMHC Certificates who has not delivered a letter of
transmittal in accordance with the preceding sentence (x) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the CMHC Certificates shall pass, only upon delivery of the
CMHC Certificates to the Payment Agent and shall be in such form and have such
other provisions as Netsmart may reasonably specify) and (y) instructions for
use in effecting the surrender of the CMHC Certificates in exchange for that
portion of the Merger Consideration that is deposited with the Payment Agent for
each CMHC Share represented by such CMHC Certificates. Upon surrender of a CMHC
Certificate or Certificates for cancellation to the Payment Agent, together with
such letter of transmittal duly executed and completed in accordance with its
terms, the holder of such CMHC Certificate or Certificates shall be entitled to
receive from the Payment Fund in exchange therefor (x) a cash amount equal to
(1) the product of (A) the aggregate number of the issued and outstanding CMHC
Shares formerly represented by such surrendered CMHC Certificate(s) and (B) the
difference between the amount of the Cash Consideration per share and the Cash
Consideration Per Share Reduction Amount minus (2) in the event that the holder
of CMHC Certificates is a holder of CMHC Stock Warrants, the amount of any
shortfall in the Cash Consideration Per Share Reduction Amount payable by such
holder in accordance with the provisions of Section 2.2(b)(iii) and (y) that
number of shares of Netsmart Common Stock equal to be product of (1) the
aggregate number of the issued and outstanding CMHC Shares formerly represented
by such surrendered CMHC Certificate(s) and (2) the Stock Consideration, and the
CMHC Certificate(s) so surrendered shall forthwith be canceled. If the Merger
Consideration includes a Contingent Net Working Capital Distribution, the holder
of such Certificate or Certificates shall be entitled to receive that portion of
the Merger Consideration within the time period contemplated by Section 5.5(f)
of this Agreement. In addition, the holders of such cancelled Certificate or
Certificates shall be entitled from time to time to receive in respect of each
CMHC Share that was the subject of such Certificates that portion of the
Holdback Per Share Amount as and when such portion is to be distributed in
accordance with the Escrow Agreement. Netsmart and the Surviving Corporation
shall pay all fees and expenses of the Payment Agent in connection with the
distribution of that portion of the Merger Consideration that was deposited with
the Payment Agent.

 
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(ii) As of the Effective Time, each holder of CMHC Stock Options who has
surrendered his CMHC Stock Options in accordance with the terms of the Option
Cancellation Agreements shall have the right to receive from the Payment Fund in
respect of each CMHC Share that is the subject of such option (x) a cash amount
equal to the product of (1) the number of CMHC Shares that were the subject of
such cancelled options and (2) the difference between (A) the excess of the
Option Cash Consideration per share over the per share exercise price of such
option and (B) the Cash Consideration Per Share Reduction Amount. If the Merger
Consideration includes a Contingent Net Working Capital Distribution, the holder
of such cancelled CMHC Stock Options shall be entitled to receive that portion
of the Merger Consideration within the time period contemplated by Section
5.5(f) of this Agreement.

(iii) As of the Effective Time, each holder of CMHC Stock Warrants who has
surrendered his CMHC Stock Warrants in accordance with the terms of the Warrant
Exchange Agreements shall have the right to receive from the Payment Fund in
respect of each CMHC Share that is the subject of such warrant (x) a cash amount
equal to the product of (1) the number of CMHC Shares that were the subject of
such cancelled warrants and (2) the difference between (A) the excess of the
Cash Consideration per share over the per share exercise price of such warrant
and (B) the Cash Consideration Per Share Reduction Amount and (y) that number of
shares of Netsmart Common Stock equal to the product of (1) the aggregate number
of CMHC Shares that were the subject of such cancelled Warrants and (2) the
Stock Consideration. If the Merger Consideration includes a Contingent Net
Working Capital Distribution, the holder of such cancelled CMHC Stock Warrants
shall be entitled to receive that portion of the Merger Consideration within the
time period contemplated by Section 5.5(f) of this Agreement.

(c) Termination of Payment Fund. Any portion of the Payment Fund which remains
undistributed to the Securities Holders of CMHC for nine (9) months after the
Effective Time shall be delivered to Netsmart, upon demand, and any Shareholders
of CMHC, any holders of cancelled CMHC Stock Options and any holders of
cancelled CMHC Stock Warrants who have not theretofore complied with this
Article II shall thereafter look only to Netsmart (subject to abandoned
property, escheat and other similar laws) as general creditors for payment of
their claim for that portion of the Merger Consideration that was deposited with
the Payment Agent.
 
 
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2.3 Distributions With Respect to Unexchanged Shares.

No dividends or other distributions declared or made after the date of this
Agreement with respect to Netsmart Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered CMHC Certificate
with respect to the shares of Netsmart Common Stock represented thereby until
the holder of record of such CMHC Certificate shall surrender such CMHC
Certificate.
 
2.4 Transfers of Ownership.

If any certificate for shares of Netsmart Common Stock is to be issued in a name
other than that in which the CMHC Certificate surrendered in exchange therefor
is registered, it will be a condition of the issuance thereof that the CMHC
Certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange will have paid to
the Payment Agent any transfer or any other taxes required by reason of the
issuance of a certificate for shares of Netsmart Common Stock in any name other
than that of the registered holder of the CMHC Certificate surrendered, or
established to the satisfaction of the Payment Agent that such tax has been paid
or is not payable.
 
2.5 No Further Ownership Rights in CMHC Shares.

All cash paid and to be paid, and all shares of Netsmart Common Stock (including
dividends and distributions thereon) issued, in connection with the surrender
for exchange of CMHC Certificates in accordance with the terms of this Agreement
shall be deemed to have been paid and issued in full satisfaction of all rights
pertaining to the CMHC Shares. Unless otherwise required by Section 1701.85 of
the OGCL, from and after the Effective Time, there shall be no further
registration of transfers on the records of the Surviving Corporation of CMHC
Shares which were outstanding immediately prior to the Effective Time. If after
the Effective Time, CMHC Certificates (other than CMHC Certificates representing
Dissenting Shares) are presented to the Surviving Corporation for any reason,
they shall, when accompanied by proper documentation, be exchanged and canceled
as provided in this Article II.
 
2.6 Lost, Stolen or Destroyed Certificates.

In the event any CMHC Certificates shall have been lost, stolen or destroyed,
the Payment Agent shall, in exchange for such lost, stolen or destroyed CMHC
Certificates, upon the making of an affidavit of that fact by the holder
thereof, pay that portion of the Merger Consideration deposited with the Payment
Agent as provided in this Article II in respect of such CMHC Certificates;
provided, however, that Netsmart may, in its discretion and as a condition
precedent to the payment and issuance thereof, require that the owner of such
lost, stolen or destroyed CMHC Certificates deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Netsmart, Surviving Corporation or the Payment Agent with respect to the CMHC
Certificates alleged to have been lost, stolen or destroyed.
 
 
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2.7 No Liability.

None of Netsmart, Surviving Corporation or any other party hereto shall be
liable to a holder of CMHC Shares or shares of Netsmart Common Stock for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
 
2.8 Intentionally Left Blank. 

2.9 Escrow.

At the Closing, Netsmart shall deposit with the Escrow Agent (i) a cash amount
equal to the product of (x) the aggregate number of the issued and outstanding
CMHC Shares entitled to receive Cash Consideration under Section 2.1(c)(i) and
(y) the Holdback Per Share Amount, (ii) a cash amount equal to the product of
(x) the aggregate number of CMHC Shares that were the subject of the cancelled
CMHC Stock Options and (y) the Holdback Per Share Amount and (iii) a cash amount
equal to the product of (x) the aggregate number of CMHC Shares that were the
subject of the cancelled CMHC Stock Warrants and (y) the Holdback Per Share
Amount (the “Escrow Amount”). The Escrow Amount shall be allocated among the
Securities Holders Indemnity Fund, the Net Working Capital Adjustment Fund and
the Reimbursement Fund. If (a) there are no Dissenting Shares, (b) all holders
of CMHC Stock Options have entered into the Stock Option Cancellation Agreements
and (c) all holders of the CMHC Stock Warrants have entered into the Stock
Warrant Exchange Agreements, the Escrow Amount, which is to be held, released
and/or disbursed by the Escrow Agent in accordance with the terms of the Escrow
Agreement, shall be apportioned as follows: (i) $2,100,787.63 in the Securities
Holders Indemnity Fund in respect of Securities Holders’ Indemnity Obligations
pursuant to Section 8.3, (ii) $97,964.19 in the Net Working Capital Adjustment
Fund in respect of the net working capital adjustment pursuant to the terms of
Section 5.5; and (iii) $152,388.74 in the Reimbursement Fund in respect of the
reimbursement of expenses incurred by the Securities Holders’ Representative in
accordance with the terms of this Agreement and the Escrow Agreement.

2.10 Payment of Shareholder Expenses .

(a) In accordance with Section 5.3(b), the Securities Holders are responsible
for the payment of the Shareholder Expenses. In order to pay such expenses, at
the Closing, Netsmart shall deposit with the Payment Agent a portion of the Cash
Consideration otherwise payable by Netsmart to Shareholders and holders of
cancelled CMHC Stock Warrants and a portion of the Option Cash Consideration
otherwise payable to the holders of cancelled CMHC Stock Options in an amount
equal to (i) a cash amount equal to the product of (x) the aggregate number of
issued and outstanding CMHC Shares entitled to receive Cash Consideration under
Section 2.1(c)(i) and (y) the Closing Payment Per Share Amount; (ii) a cash
amount equal to the product of (x) the aggregate number of CMHC Shares that were
the subject of the cancelled CMHC Stock Options and (y) the Closing Payment Per
Share Amount and (iii) a cash amount equal to the product of (x) the aggregate
number of CMHC Shares that were the subject of the cancelled CMHC Stock Warrants
and (y) the Closing Payment Per Share Amount. At the Closing, the Payment Agent
shall pay the Shareholder Expenses directly to the Persons entitled to payment
from the amounts deposited by Netsmart. The amount of the Shareholders Expenses
paid by the Payment Agent from the funds deposited by Netsmart in accordance
with this Section 2.10 shall be deemed to have been received by the Securities
Holders and shall be part of the Merger Consideration paid by Netsmart.

 
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(b) Legal counsel and the investment banker to CMHC shall submit an invoice to
CMHC, Netsmart and the Payment Agent not later than one business day prior to
the Closing in connection with their respective fees and expenses to be paid in
accordance with this Section 2.10 (there are no fees or expenses due to
accountants in respect of the matters identified in Section 5.3(b)(iii)). Such
amounts shall be paid by wire transfer from the Payment Agent on the Closing
Date in accordance with written instructions delivered to the Payment Agent from
legal counsel and the investment banker, respectively, at least one business day
prior to the Closing.

(c) With the funds deposited by Netsmart with the Payment Agent in accordance
with this Section 2.10, the Payment Agent shall pay the Change in Control
Payments described on Schedule 5.3(b) to each Key Employee by wire transfer in
accordance with written instructions delivered to the Payment Agent from such
Key Employee at least one business day prior to the Closing, or in the absence
of such instructions from a Key Employee, by the delivery to such Key Employee
of a cashier or certified check made payable to the order of such Key Employee.
With respect to the payments made to the Key Employees, Netsmart shall be
entitled to deduct and withhold such amounts as Netsmart or CMHC is required to
deduct and withhold under the Code, or any Applicable Law related to Taxes.
 
2.11 Withholding Rights.

Each of the Surviving Corporation and Netsmart shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any Securities Holders such amounts as Netsmart or the Surviving
Corporation are required to deduct and withhold under the Code, or any
Applicable Law related to Taxes (a “Tax Law”), with respect to the making of
such payment; provided, however, that the Surviving Corporation or Netsmart, as
the case may be, shall give prior notice to any such Securities Holder from whom
funds are so withheld of the amount of such withholding. To the extent that
amounts are so withheld by Netsmart or the Surviving Corporation, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to such Securities Holder in respect of whom such deduction and withholding was
made by Netsmart or the Surviving Corporation. All amounts so deducted or
withheld pursuant to the Code, or any other Tax Law, shall be paid to or
deposited with the appropriate Governmental Authority at the time and place
required by the Code or other Tax Law, as applicable.
 
 
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CMHC

CMHC represents and warrants to Netsmart and Acquisition as follows:
 
3.1 Organization and Authority.

CMHC is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, with all requisite
corporate power and authority to own, operate and lease its properties and
assets and to carry on its business as now being conducted. CMHC is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which CMHC is required to be so qualified or licensed, except
where failure to be so qualified or licensed has not had, and would not
reasonably be expected to have, a Material Adverse Effect.
 
3.2 Subsidiaries.

Except as set forth on Schedule 3.2, CMHC has no subsidiaries and CMHC has no
direct or indirect equity ownership in any firm, association, corporation,
business enterprise or other Person. The subsidiaries identified on Schedule 3.2
do not engage in any business activities and do not have any material
liabilities other than as set forth therein.
 
3.3 Authorization of Agreements.

CMHC has the requisite corporate power and authority to execute, deliver and
enter into this Agreement and each of the Related Agreements to which it is a
party and to perform its obligations under this Agreement and each of such
Related Agreements. The execution, delivery and, subject to obtaining the
requisite approval of the shareholders of CMHC, performance by CMHC of this
Agreement and each of the Related Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of CMHC. This Agreement
has been, and, when executed and delivered by CMHC, each of the Related
Agreements to which it is a party will be, duly executed and delivered by CMHC.
Subject to obtaining the requisite approval of the shareholders of CMHC, this
Agreement constitutes, and, when executed and delivered by the parties thereto,
each of the Related Agreements to which CMHC is a party will constitute, the
binding obligation of CMHC, enforceable against it in accordance with its
respective terms, except as the enforcement thereof may be subject to or limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors’ rights generally now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies.
 
3.4 Capital Stock.

Schedule 3.4 sets forth the authorized, issued and outstanding shares of all
classes of the capital stock of CMHC, including the name of each current holder
and the number of shares of record held by such holder. Except as set forth on
Schedule 3.4, there are no other equity interests in CMHC. Except for the
issuance, if any, of CMHC Shares upon the exercise of a CMHC Stock Option or
CMHC Stock Warrant, there has not been any change in the authorized, issued and
outstanding capital stock of CMHC from and after the Latest Balance Sheet Date.
All of the outstanding capital stock of CMHC has been duly authorized and is
validly issued, fully paid and nonassessable. All outstanding capital stock of
CMHC was issued in compliance with the Articles of Incorporation and Code of
Regulations of CMHC and with Applicable Law. Except as set forth on Schedule
3.4, there are no rights (whether by law, preemption, contracts or otherwise),
subscriptions, warrants, options, conversion rights, commitments,
understandings, arrangements or agreements of any kind authorized or outstanding
to purchase or otherwise acquire from CMHC or to the Knowledge of CMHC any other
Person, any capital stock, or other securities or obligations of any kind
convertible into or exchangeable for any capital stock of CMHC or any other
equity interest in CMHC. Except for the Shareholders Voting Agreement and as set
forth on Schedule 3.4, there is no proxy, or any agreement, arrangement or
understanding of any kind authorized or outstanding which restricts, limits or
otherwise affects the ability to transfer or the right to vote any of the shares
of the capital stock of CMHC. There are no accrued or unpaid dividends with
respect to any issued and outstanding shares of the capital stock of CMHC.
 
 
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3.5 No Conflicts.

Except for the necessary approvals of the Shareholders of CMHC and as set forth
on Schedule 3.5, the execution and delivery by CMHC of this Agreement, the
Related Agreements to which it is a party and any other agreement or certificate
of CMHC executed and delivered in accordance with the terms hereof do not, and
the performance by CMHC of its obligations under this Agreement, such Related
Agreements and such other agreements or certificates and the consummation of all
of the transactions contemplated hereby and thereby will not: (i) with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach of any provision of the Articles of Incorporation or
Code of Regulations of CMHC; (ii) require CMHC to obtain the consent, waiver,
approval, or authorization of, or CMHC to make a registration, declaration or
filing with, any Person or Governmental Authority; and (iii) with or without the
giving of notice or the passage of time or both, (a) violate or conflict with,
or (b) result in a material breach or termination of, or (c) constitute a
material default under, or grounds for the modification or cancellation of, or
(d) result in the imposition of any penalty or revocation or suspension of
rights under, or (e) accelerate or permit the acceleration of the performance
required by, or (f) result in the creation of any Liens, except Permitted Liens,
upon any of the material assets of CMHC, or otherwise give rise to any Liability
under, any material agreement (including, without limitation, any Scheduled
Contract or Government Contract), permit or any Order, or any statute or
regulation to which CMHC is a party or by which CMHC or any of its assets may be
bound or governed.
 
3.6 Financial Statements.

Attached hereto as Schedule 3.6 are the Financial Statements of CMHC. Except as
set forth on Schedule 3.6, for the respective periods, the Financial Statements:
(i) present fairly in all material respects the consolidated financial position
of CMHC and the Partnership at such dates and the results of operations for the
respective periods ended on such dates, subject only in the case of the
unaudited financial statements for the quarter ended June 30, 2005, to normal
year end adjustments; and (ii) were prepared in accordance with Past Practice
and GAAP, consistently applied during the periods (except as may be indicated
therein or in the notes thereto and except that the unaudited financial
statements as and for the quarter ended June 30, 2005 may not contain all of the
notes thereto required by GAAP).

 
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3.7 Taxes. 

(a) CMHC has delivered to, or made available for inspection by, Netsmart correct
and complete copies of all Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by CMHC filed or received since March
31, 2002.

(b) All Tax Returns of CMHC have been timely filed, and each such Tax Return is
true, correct and complete in all material respects and was prepared in
substantial compliance with all applicable laws and regulations.

(c) Except as set forth in Schedule 3.7(c), all Taxes due and owing by CMHC have
been paid.
 
(d) CMHC has withheld and paid all Taxes required to have been withheld and paid
in connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.

(e) Except as set forth in Schedule 3.7(e), the Tax Returns of CMHC have not
been audited by any Governmental Authority during the past three years. To the
Knowledge of CMHC, no Governmental Authority has proposed any additional Taxes
with respect to CMHC or for which CMHC may be liable or with respect to any of
CMHC’s operations or business. There are no pending or, to the Knowledge of
CMHC, threatened claims or assessments for Taxes with respect to CMHC. There are
no pending or, to the Knowledge of CMHC, threatened examinations with respect to
Taxes by any Governmental Authority with respect to CMHC.

(f) CMHC has not been granted an extension of any statutes of limitations with
respect to any Taxes for any fiscal year. Except as set forth on Schedule
3.7(f), CMHC has not requested any extension of time within which to file any
currently unfiled Tax Returns.

(g) There are no Liens for Taxes (other than for current Taxes not yet due and
payable) upon the properties or assets of CMHC.

(h) Except as set forth in Schedule 3.7(h), CMHC is not liable for Taxes of any
other person and is neither currently under any contractual obligation nor a
party to any tax sharing agreement or other agreement providing for payments by
CMHC with respect to Taxes.

(i) CMHC has not engaged in any transaction for which its participation is
required to be disclosed under Treasury Regulation section 1.6011-4.

(j) Intercompany transactions engaged in by CMHC are in compliance with the
transfer pricing provisions of Code § 482 and the Treasury Regulations
thereunder (or any corresponding provision or regulation of state, local or
foreign law).

 
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(k) CMHC will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date; (ii)
“closing agreement” as described in Code § 7121 (or any corresponding or similar
provision of state, local or foreign income Tax law) executed on or prior to the
Closing Date; (iii) intercompany transaction or excess loss account described in
the Treasury regulations under Code § 1502 (or any corresponding or similar
provision of state, local or foreign income Tax law); (iv) installment sale or
open transaction disposition made on or prior to the Closing Date; or (v)
prepaid amount received on or prior to the Closing Date.

(l) Schedule 3.7(l) lists all of the jurisdictions where CMHC is currently
required or obligated to file Tax Returns. No claim has been made by a
Governmental Authority in a jurisdiction where CMHC does not currently file Tax
Returns that CMHC may be subject to taxation by that jurisdiction.

(m) CMHC has not filed or been included in a combined, consolidated or unitary
tax return (or substantial equivalent thereof) of any Person (other than a
return with respect to a group the common parent of which was CMHC), and has no
Liability for the Taxes of any Person under Treasury Regulation § 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise.

(n) CMHC is not a party to any agreement, contract, arrangement or plan that has
resulted or would result separately, or in the aggregate, in the payment of an
excess parachute payment within the meaning of Code § 280G (or any corresponding
provision of state, local or foreign law) in connection with the Merger.

(o) CMHC has not been a United States real property holding corporation within
the meaning of Code § 897(c)(2) during the applicable period specified in Code §
897(c)(1)(A)(ii).

(p) CMHC has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code § 6662.

(q) CMHC has properly classified its workers as either employees or independent
contractors for federal, state, local and foreign tax purposes.

(r) CMHC does not have a permanent establishment, as defined in an applicable
tax treaty, in any country (other than the United States).

(s) Except as set forth on Schedule 3.7(s), CMHC has not distributed stock of
another Person or had its stock distributed by another Person in a transaction
that was purported or intended to be governed in whole or in part by Code § 355
or § 361.

3.8 No Adverse Changes.

Except as set forth on Schedule 3.8 and, in the case of clause (i) hereof except
for conduct or changes related to the transactions contemplated by this
Agreement, since the Latest Balance Sheet Date: (i) the business of CMHC has
been conducted only in the Ordinary Course of Business; (ii) there has been no
change in the financial condition, assets, liabilities, business, operations, or
affairs of CMHC other than changes in the Ordinary Course of Business, none of
which singly, and no combination of which in the aggregate has had, or would
reasonably be expected to have, a Material Adverse Effect on CMHC; and (iii) to
the Knowledge of CMHC, there is no threatened occurrence or development which
would reasonably be expected to have a Material Adverse Effect on CMHC.
 
 
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3.9 Conduct of Business.

Except as disclosed on Schedule 3.9, since the Latest Balance Sheet Date, CMHC
has not: (i) except for transactions contemplated by, and actions taken in
connection with, this Agreement, created or incurred any material Liability
other than in the Ordinary Course of Business; (ii) subjected to any Liens,
except Permitted Liens, any of its properties, real or personal, or assets,
tangible or intangible; (iii) discharged or satisfied any Lien or paid any
Liability except, in each case, in the Ordinary Course of Business; (iv) waived,
released or compromised any claims or rights of material value under, or
terminated or materially modified, any Material/Service Agreement; (v) entered
into any settlement, compromise or consent with respect to any Action;
(vi) sold, assigned, transferred, leased or otherwise disposed of any of its
assets, tangible or intangible, or canceled any debts or claims except, in each
case, for fair consideration in the Ordinary Course of Business; (vii) declared
or paid any dividends, or made any other distribution on or in respect of, or
directly or indirectly purchased, retired, redeemed or otherwise acquired any
shares of its capital stock, or paid any notes or open accounts to, or paid any
amount or transferred any asset to, any Shareholder, other than compensation
paid in the Ordinary Course of Business in accordance with the terms of
employment of such Shareholder in effect on the Latest Balance Sheet Date;
(viii) except for (a) Government Contracts, Customer Contracts and
Material/Service Agreements entered into in the Ordinary Course of Business, (b)
any commitments to pay compensation to any employee hired after the Latest
Balance Sheet Date and (c) contracts or commitments entered into in connection
with the transaction contemplated by this Agreement, made or become a party to,
or become bound by, any contract or commitment or renewed, extended, amended,
modified or terminated any contract or commitment which in any one case involved
an amount in excess of $20,000 or in the aggregate an amount in excess of
$50,000; (ix) adopted or (except as otherwise required by Applicable Law),
amended, any Employee Benefit Plan, or except (a) pursuant to an existing
agreement, or (b) in connection with any incentive bonus payments to officers or
employees in an amount that does not exceed the aggregate amount currently
accrued by CMHC for such incentive bonuses and set forth in Schedule 3.9 hereto,
(c) for the transactions with Key Employees described in Section 5.3(b) or (d)
for the transactions described in Section 6.1(j): (1) paid, agreed to pay or
entered into or modified any contract requiring it to pay, any bonus, extra
compensation, pension or severance pay to any of its officers or employees, or
(2) increased the rate or altered the form of compensation, including, without
limitation, salaries, fees, commission rates, bonuses, profit sharing,
incentive, pension, retirement or other similar payments to any of its
directors, officers or employees; (x) increased the compensation, fees or other
remuneration payable or to become payable to any of its independent contractors,
consultants or agents; (xi) issued or sold any CMHC Shares or securities
convertible into CMHC Shares (excluding any CMHC Shares issued in connection
with the exercise of a CMHC Stock Option or CMHC Stock Warrant that was issued
and outstanding on the Latest Balance Sheet Date); (xii) announced any material
change in the form or manner of distribution of any of its products or services;
(xiii) materially changed any of its accounting methods or principles used in
recording transactions on its books or records or in preparing the Financial
Statements; (xiv) entered into any contract or commitment to do any of the
foregoing; or (xv) except for transactions contemplated by, and actions taken in
connection with, this Agreement, entered into any other transaction or taken any
other action not in the Ordinary Course of Business.
 
 
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3.10 Title to Assets.

CMHC has good title to all of the assets owned by it and valid leasehold
interests in all of the real and personal property leased by it, free and clear
of all Liens except Permitted Liens. No condemnation, eminent domain or similar
proceeding affecting all or any material portion of any such real property is
pending or, to the Knowledge of CMHC, threatened. Except for license agreements
entered into with customers of CMHC in the Ordinary Course of Business in
respect of certain assets constituting Intellectual Property of CMHC, none of
CMHC’s assets is subject to any sublease, sublicense or other agreement granting
to any other Person any right to the use or enjoyment of such assets. Other than
those of CMHC’s assets which are leased or licensed by CMHC from other Persons,
there are no assets which are owned by any third party. All of the assets and
properties owned or leased by CMHC (i) are in the aggregate sufficient and
adequate to carry on the business of CMHC as currently conducted; (ii) are, in
the aggregate, in all material respects in a good state of maintenance, repair
and operating condition as required for the operation and use thereof in the
Ordinary Course of Business; and (iii) comply (as to assets and properties owned
by CMHC) in all respects with Applicable Law and comply with the terms and
conditions of all leases and other agreements to which CMHC is a party relating
to any such property, except where the failure to be in such compliance has not
had, and would not reasonably be expected to have, a Material Adverse Effect on
CMHC.
 
3.11 Real Property.

(a) CMHC does not own any real property.

(b) Schedule 3.11(b) sets forth a description of each parcel of real property
leased by CMHC. CMHC has delivered to Netsmart a true and complete copy of a
lease agreement dated as of January 6, 1994, including the First Amendment to
Lease Agreement dated April 29, 1999 and as supplemented by the letter dated
March 25, 2004 from CMHC to the Partnership relating the exercise of renewal
options (collectively, the “Lease”) between CMHC and the Partnership with
respect to certain real property located at 570 Metro Place North, Dublin, Ohio
43017. The real property leased to CMHC under the Lease is referred to herein as
the “Business Premises”. Except as set forth on Schedule 3.11(b), the only real
property leased or subleased to CMHC and/or used for or in connection with the
business of CMHC currently is the Business Premises.

(c) CMHC enjoys quiet possession under the Lease and the lease referenced in
item 2 of Schedule 3.11(b), each of which, to the Knowledge of CMHC, is
enforceable in accordance with its respective terms against the lessor
thereunder. CMHC is not in default under the terms of the Lease or the lease
referenced in item 2 of Schedule 3.11(b), except for any such default which has
not had, and would not reasonably be expected to have, a Material Adverse Effect
on CMHC, and no condition exists and no event has occurred which, with or
without the passage of time or the giving of notice or both, would constitute
such a default. Each of the Lease and the lease referenced in item 2 of Schedule
3.11(b) is a valid and binding obligation of CMHC.

 
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(d) The Business Premises are occupied solely by CMHC and are being used
exclusively for, and in connection with, CMHC’s business. CMHC has not
transferred, conveyed or encumbered any interest in the Lease except for
Permitted Liens.
 
3.12 Inventory.

Schedule 3.12 hereto sets forth a summary of all of the inventory of CMHC as of
the Latest Balance Sheet Date, whether or not reflected on the Latest Balance
Sheet or in the Financial Statements (the “Inventory”). The Inventory summarized
on Schedule 3.12 and all additions thereto acquired since the Latest Balance
Sheet Date (not having been disposed of since the Latest Balance Sheet Date in
the Ordinary Course of Business) are of a quantity and quality usable and
saleable in the Ordinary Course of Business. All additions to the Inventory
acquired since the Latest Balance Sheet Date were acquired in the Ordinary
Course of Business at a cost not exceeding market prices at the time of
purchase. Obsolete, discontinued, returned, damaged, overage or off-quality
items do not constitute a material part of such Inventory. Finished goods in
Inventory conform to published specifications, are free from material defects
and are marketable and saleable in the Ordinary Course of Business at the
current prices of CMHC in their current condition. All Inventory not written off
has been recorded on the books of CMHC at the lower of cost or market value
determined in accordance with GAAP.
 
3.13 Accounts Receivable.

All accounts and notes receivable of CMHC represent valid obligations to CMHC
arising from bona fide transactions in the Ordinary Course of Business and,
except as set forth on Schedule 3.13, to the Knowledge of CMHC, are not subject
to claims or set-off or other defenses or counterclaims. All accounts and notes
payable by CMHC arose in bona fide transactions in the Ordinary Course of
Business.
 
3.14 Material/Service Agreements; Other Contracts.

(a) Exclusive of (i) the Government Contracts listed on Schedule 3.15(a) and
(ii) contracts entered into with customers in the Ordinary Course of Business
which are not Government Contracts (“Customer Contracts”), Schedule 3.14(a) sets
forth a list of all contracts or agreements, whether oral or written, for the
provision, purchase or sale of materials, inventory or services with a valuation
of $20,000 or more to which CMHC is a party or by which CMHC or its assets or
properties are bound and which have not yet been performed in full
(collectively, the “Material/Service Agreements”). Except as set forth on
Schedule 3.14(a), no party thereto has notified CMHC of its intention to
terminate or cancel any such Material/Service Agreement in accordance with the
terms thereof.

 
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(b) Except as disclosed on Schedule 3.14(b) hereto, and other than disclosed on
Schedule 3.14(a) or 3.15(a), regardless of whether oral or written, CMHC is not
a party to, or bound by, any of the following:
 
(i) a contract, commitment or arrangement involving, in any one case, $20,000 or
more, including without limitation, licenses (other than licenses for
Intellectual Property) and those requiring capital expenditures;

(ii) a contract with a term of, or requiring performance, more than one year
from its date;

(iii) a lease or lease purchase agreement, mortgage, conditional sale agreement,
indenture, security agreement, credit agreement, pledge or option with respect
to any property, real or personal (tangible or intangible), in any capacity;
 
(iv) a contract of employment; 

(v) a contract or agreement with any independent contractor or consultant;

(vi) a note, loan, credit or financing agreement or other contract for money
borrowed or other evidence of indebtedness of CMHC, all related security
agreements and collateral documents, including any agreement for any commitment
for future loans, credit or financing, and all other agreements that create a
Lien on any property or asset;
 
(vii) a guarantee of a payment by any Person in excess of $20,000;

(viii) an agency (sales or otherwise), distribution, brokerage (including,
without limitation, any brokerage or finder's agreement or arrangement with
respect to any of the transactions contemplated by this Agreement) or
advertising agreement;

(ix) a contract with investment bankers, accountants, or attorneys, including
those relating to this Agreement;

(x) a shareholder agreement or contract with any shareholder, director or
officer of CMHC or any Affiliate of such Persons;

(xi) a contract, commitment or arrangement which restricts CMHC from engaging or
competing in any business or in any location or from soliciting clients,
employees or other service providers or which requires CMHC to maintain the
confidentiality of any material matter;

(xii) a partnership or joint venture agreement;

(xiii) a contract containing a change of control or acceleration of performance
provision that would be triggered by the closing of the transactions
contemplated by this Agreement;

 
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(xiv) a Tax sharing arrangement with any Person pursuant to which CMHC or
Netsmart will have to make any payments based on the transactions contemplated
by this Agreement; and

(xv) a franchise or royalty agreement.
 
CMHC has made available for inspection by Netsmart a correct and complete copy
of each written contract, agreement and other document listed on Schedule
3.14(a) or 3.14(b) hereto and all amendments thereto and any waivers granted
thereunder (collectively, including the Material/Service Contracts and the
Customer Contracts, the “Scheduled Contracts”).

(c) Except as described on Schedule 3.14(c) hereto, all Scheduled Contracts are
valid and binding agreements, in full force and effect and enforceable in
accordance with their respective terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights generally now or
hereafter in effect and subject to the application of equitable principles and
the availability of equitable remedies. Except as described in Schedule 3.14(c),
there is not, under any Scheduled Contract any existing material default or
material breach by CMHC, or, to the Knowledge of CMHC, by any other party or any
event, condition or act (including the consummation of the transactions
contemplated by this agreement) which, with the giving of notice or the lapse of
time (i) would constitute a default under or a breach by CMHC of any provision
of any Scheduled Contract or (ii) would permit the acceleration of any
obligation of any party to any Scheduled Contract or the creation of a Lien upon
any of CMHC’s assets. CMHC has not received written notice of the pending or
threatened cancellation, revocation or termination of any of the Scheduled
Contracts, and does not have Knowledge that any such cancellation, revocation or
termination is reasonably likely to occur (other than pursuant to the expiration
of such Scheduled Contract in accordance with its terms). CMHC has not assigned,
delegated or otherwise transferred any of its rights or obligations with respect
to any Scheduled Contract. None of the Scheduled Contracts places restrictions
on CMHC to engage in its business in any place or to solicit any Persons as
customers, employees or independent contractors. Except for Scheduled Contracts
entered into in connection with the transactions contemplated by this Agreement,
none of the Scheduled Contracts was entered into outside of the Ordinary Course
of Business.
 
3.15 Government Contracts. 

(a) Schedule 3.15(a) sets forth a complete and accurate list as of the Latest
Balance Sheet Date of the Government Contracts, true, complete and correct
copies of which have been made available to Netsmart. “Government Contracts”
shall mean all current contracts, having a valuation of $25,000 or more between
CMHC and any Governmental Authority.

(b) Except as set forth in Schedule 3.15(b), CMHC is not a party to any current
material dispute relating to a Government Contract. CMHC has not received notice
that CMHC has breached or violated any Applicable Law, certification,
representation, clause, provision, or requirement with respect to any Government
Contract. There are no current or, to the Knowledge of CMHC, threatened Actions
against CMHC arising out of or relating to any Government Contract. CMHC has not
received a cure notice, a show cause notice, a suspension of work notice, or a
stop work order with respect to any Government Contract.

 
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(c) Except as set forth in Schedule 3.15(b), no Governmental Authority nor any
other Person has notified CMHC that CMHC or any of its directors, officers,
agents, or employees have breached or violated any Applicable Law,
certification, regulation, representation, clause, provision, or requirement
relating to any Government Contract.

(d) With respect to each Government Contract, except as set forth in Schedule
3.15(b), CMHC has not been challenged by the Governmental Authority as to any
cost incurred by CMHC nor has any such cost been the subject of any audit or
investigation by the Governmental Authority, or disallowed by the Governmental
Authority. No payment due to CMHC relating to any Government Contract has been
withheld (except to the extent such withholding is in the Ordinary Course of
Business) or set off, nor has any claim been made by the Governmental Authority
to withhold (except to the extent such withholding is in the Ordinary Course of
Business) or set off money due to CMHC under a Government Contract.

(e) Except as set forth in Schedule 3.15(b), CMHC has complied in all material
respects with the terms and conditions of each Government Contract, including
all clauses, provisions and requirements incorporated expressly, by reference or
by operation of law. CMHC has, with respect to all Government Contracts: (x)
complied in all material respects with all certifications and representations it
has executed, acknowledged or set forth with respect to each such contract; and
(y) submitted certifications and representations with respect to each such
contract that were in all material respects accurate, current and complete when
submitted, and were properly updated in all material respects to the extent
required by law or the applicable contract.

(f) Except as set forth in Schedule 3.15(b), CMHC has not been notified of any
warranty claims relating to any Government Contract other than in the Ordinary
Course of Business.

(g) CMHC has not received notice of any unfavorable past performance
assessments, evaluations, or ratings relating to any Government Contract.

(h) Except as set forth in Schedule 3.15(b), to the Knowledge of CMHC, no
Government Contracts are subject to any right of set off, except as provided
under Applicable Law. CMHC has not received any written notice that monies due
under any Government Contract are or may be subject to withholding or set off.

(i) Except as set forth in Schedule 3.15(i), during the past three (3) years,
CMHC has not been nor is it now being audited or, to the Knowledge of CMHC,
investigated, by any Governmental Authority in respect of any Government
Contract.

(j) Neither CMHC, nor, to the Knowledge of CMHC, any of CMHC’s officers,
directors, or employees, has knowingly or recklessly provided to any Person any
materially false or misleading information with respect to CMHC, or any of its
officers, directors, equity holders or employees, in connection with the
procurement of, performance under or renewal of, any Government Contract.

 
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3.16 Intellectual Property.

(a) Schedule 3.16(a) lists all of the following intellectual property owned by
CMHC: (i) all issued Patents, and all pending applications for Patents; (ii) all
registered Trademarks, and all pending applications for Trademarks; (iii) all
registered Copyrights, and all pending applications for Copyrights; and (iv) all
Domain Names that are material to CMHC’s business. Schedule 3.16(a) lists all
common-law Trademarks owned by CMHC, and all Copyrights that are not registered
or the subject matter or an application to register, that are material to CMHC’s
business and owned by CMHC.

(b) Other than Customer Contracts and Government Contracts entered into in the
Ordinary Course of Business, Schedule 3.16(b) lists all licenses, sublicenses,
agreements or instruments involving the Intellectual Property which are material
to CMHC’s business, including (i) licenses by CMHC to any Person of any
Intellectual Property other than licenses granted to customers in the Ordinary
Course of Business, and (ii) all licenses by any other Person to CMHC of any
Intellectual Property (except with respect to generally available
“off-the-shelf” software) which are necessary for the conduct of CMHC’s business
(each, a “License”). Each License identified on Schedule 3.16(b) is a valid and
binding agreement, in full force and effect and enforceable in accordance with
its terms. With respect to each License, there is no default (or event that with
the giving of notice or passage of time would constitute a default) by CMHC, or,
to the Knowledge of CMHC, the other party thereto. There are no pending, or, to
the Knowledge of CMHC, threatened claims with respect to any License. True and
complete copies of all Licenses have been provided to Netsmart.

(c) CMHC has good and valid title to, or otherwise possesses the rights to use
by written License, all Intellectual Property necessary for the conduct of
CMHC’s business. Except for (i) Liens listed on Schedule 3.16(c), (ii)
Intellectual Property owned by third parties and (iii) licenses granted to
customers in the Ordinary Course of Business, to the Knowledge of CMHC, no
Person other than CMHC has any right or interest of any kind or nature in or
with respect to the Intellectual Property, or any portion thereof, or any rights
to sell, license, lease, transfer or use or otherwise exploit the Intellectual
Property or any portion thereof. CMHC is the owner of all Intellectual Property
created by its officers or employees as “works for hire”. All independent
contractors of CMHC who have created Intellectual Property for CMHC have
executed an agreement under which all rights, title and ownership in and to such
Intellectual Property have been assigned to CMHC.

(d) CMHC has not received written notice that it has, nor, to the Knowledge of
CMHC, has CMHC, infringed upon, misappropriated or misused, any intellectual
property or proprietary information of another Person. There are no pending or,
to the Knowledge of CMHC, threatened claims or proceedings contesting or
challenging the Intellectual Property, or CMHC’s use of the Intellectual
Property owned by another Person. Except as set forth in Schedule 3.16(d), to
the Knowledge of CMHC, no Person is infringing upon, misappropriating, or
otherwise violating CMHC’s rights to the Intellectual Property.

 
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(e) Schedule 3.16(e) contains a true and complete list of all of the Software
included, embedded or incorporated in or developed for inclusion in CMHC’s
products or in websites of CMHC, or used in the delivery of services or
otherwise by CMHC. CMHC owns or has valid licenses to all Software identified on
Schedule 3.16(e). Except as identified in Schedule 3.16(e), no open source or
public library software, including any version of any software licensed pursuant
to any GNU public license, is, in whole or in part, embodied or incorporated in
the Software. CMHC has not incorporated any Intellectual Property owned by
another Person into CMHC’s Software, except as set forth on Schedule 3.16(e).
CMHC employs commercially reasonable measures to ensure that CMHC’s Software
contain no “viruses” which, for the purposes of this Agreement, means any
computer code intentionally designed to disrupt, disable or harm in any manner
the operation of any Software or hardware, but does not include any CMHC
intended features which limit a customer’s use of Software to the scope of the
customer’s license.

(f) CMHC has taken commercially reasonable measures to protect the proprietary
nature of the Intellectual Property and to maintain in confidence all Trade
Secrets and other confidential Intellectual Property and information owned or
used by CMHC in connection with CMHC’s business. To the Knowledge of CMHC, no
material Trade Secret or other material confidential Intellectual Property or
information of CMHC owned or used in connection with CMHC’s business has been
disclosed to any third party, other than pursuant to a non-disclosure or
confidentiality agreement or other conditional obligation intended to protect
CMHC’s proprietary interests in and to such Trade Secrets or confidential
Intellectual Property.

(g) Trademarks: (i) All registered Trademarks, and pending applications for
Trademarks with the United States Patent and Trademark Office (“PTO”) or any
other trademark office, are currently in compliance with all legal requirements
(including the filing of affidavits of use and renewal applications as
applicable), and are not subject to any maintenance fees or taxes or actions
falling due within ninety (90) days after the date hereof; (ii) No Trademark has
been or is now involved in any opposition, infringement, dilution, unfair
competition or cancellation proceeding and, to the Knowledge of CMHC, no such
action is threatened with respect to any of the Trademarks; (iii) No Trademark
is alleged to infringe any trade name, trademark or service mark of any other
Person and, to the Knowledge of CMHC, no Trademark is infringed; (iv) All of
CMHC’s products displaying a Trademark which has been registered with the PTO
bear the proper federal registration notice.

(h) Except as set forth on Schedule 3.16(h) the Intellectual Property is free
and clear of any and all Liens, except Permitted Liens.

(i) CMHC uses commercially reasonable practices to ensure the physical and
electronic protection of its information assets from unauthorized disclosure,
use or modification. Other than as set forth on Schedule 3.16(i), to the
Knowledge of CMHC, there has been no breach of security involving any websites
or information assets of CMHC. All data which has been collected, stored,
maintained or otherwise used by CMHC has been collected, stored, maintained and
used in accordance with all applicable U.S. and foreign laws, rules and
regulations. CMHC has not been notified of noncompliance with Applicable Law, or
any pertinent guidelines or industry standards pertaining to information
security, except as would not have a Material Adverse Effect on CMHC.
 
 
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3.17 Customer and Supplier Relationships.

(a) Attached hereto as Schedule 3.17(a) is a list of the fifty (50) largest
customers by dollar volume for the twelve months ended March 31, 2005 and the
fifty (50) largest suppliers to CMHC for the twelve months ended March 31, 2005,
with dollar volumes identified for the period from April 1, 2005 through
September 12, 2005.

(b) Except as set forth on Schedule 3.17(b), there exists no actual or, to the
Knowledge of CMHC, threatened termination, cancellation or limitation of, or any
change in, the business relationship that any of the customers or suppliers
identified in Schedule 3.17(a) has with CMHC that has had, or would reasonably
be expected to have, a Material Adverse Effect on CMHC. To the Knowledge of
CMHC, no such customer or supplier has experienced any work stoppage or other
circumstance or condition that has had or would reasonably be expected to have a
Material Adverse Effect on CMHC or that has had, or would reasonably be expected
to have, a Material Adverse Effect on CMHC’s future relationship with any such
customer or supplier. There are no pending material disputes or controversies
between CMHC and any such customer or supplier of CMHC. No such customer of CMHC
has any right to any credit or refund for products sold or services rendered or
to be rendered by CMHC pursuant to any contract, understanding or practice of
CMHC other than pursuant to the normal course return policy of CMHC.
 
3.18 Employees.

(a) Except as set forth on Schedule 3.18(a), each employee of CMHC is employed
on an at-will basis and CMHC does not have any written or oral agreement with
any such employees which would interfere with the ability to discharge such
employees. Except for (i) Merger Consideration payments under this Agreement,
(ii) rights to benefits pursuant to CMHC personnel policies and practices set
forth on Schedule 3.18(a) or under Applicable Law, or (iii) such other matters
described on Schedule 3.18(a), CMHC has not promised or represented or
distributed any written material to any of its directors, officers, employees,
consultants, independent contractors, or other personnel that any of such
Persons will be employed or engaged by or receive any particular benefits from
(i) CMHC or any of its Affiliates or (ii) Netsmart or any of its Affiliates, in
each case on or after the Closing Date. Except as described Schedule 3.18(a), to
the Knowledge of CMHC, as of the date of this Agreement, no employee of CMHC
identified on Schedule 6.1(j) has any plans to terminate or modify their status
as an employee or employees of CMHC (including upon consummation of the
transactions contemplated hereby).

(b) Schedule 3.18(b) sets forth a true, complete and correct list of all current
employees, independent contractors and consultants of CMHC and, with respect to
each such employee, independent contractor and consultant, the total
compensation (including, without limitation, with respect to employees, salary,
bonuses and incentive compensation, and, with respect to independent contractors
and consultants, fees) received by such employee and independent contractor in
the immediately preceding fiscal year of CMHC, each such employee’s, independent
contractor’s and consultant’s current compensation, each such employee’s current
title, the number of years of continuous service of each such employee and the
period of service of each such independent contractor and consultant with CMHC.
Schedule 3.18(b) also sets forth a true, complete and correct list of all
outstanding loans by CMHC to its officers or employees. All material income
taxes, social security, unemployment and other taxes due and payable have been
timely withheld by CMHC from its employees for all periods in compliance with
Applicable Law. All material federal, state, local and foreign Tax Returns, as
required by Applicable Law, have been filed by CMHC for all periods for which
Tax Returns were due with respect to employee income tax withholding, social
security and unemployment taxes, and the amounts shown thereon to be due and
payable have been paid or deposited, together with any interest and penalties
that are due as a result of CMHC’s failure to file such Tax Returns when due and
pay or deposit when due the amounts shown thereon to be due.

 
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(c) CMHC does not have any liability based upon, arising out of or relating to
the classification of any individual working for or related to CMHC as an
independent contractor or “leased employee” (within the meaning of Section
414(n) of the Code) rather than as an employee.

(d) All obligations to individuals who are or have been directors, officers,
employees, independent contractors, consultants, agents or representatives of
CMHC for wages, reimbursements, fees, retirement, severance, deferred
compensation, incentive, stock option, vacation, bonus, unemployment and other
payments, distributions and benefits accrued to and including the Closing Date
and all contributions (voluntary or otherwise) to any payments under all
employee benefit plans have been duly paid or provided for by CMHC other than
obligations arising in the Ordinary Course of Business of CMHC that are not yet
due to be paid.

(e) Except as set forth in Schedule 3.18(e), to the Knowledge of CMHC, no
employee of CMHC is bound by any agreement with any other Person that is
violated or breached by such employee performing the services he or she is
performing for CMHC.
 
3.19 Employee and Labor Relations.

(a) There is no collective bargaining agreement or union contract binding on
CMHC which covers employees of CMHC. CMHC has not been negotiating, nor is it
under any obligation to negotiate, any collective bargaining agreement or union
contract with respect to any employees of CMHC and to the Knowledge of CMHC, the
employees of CMHC are not seeking to be covered by a collective bargaining
agreement or union contract. As related to CMHC, no labor organization or group
of employees of CMHC has made a pending demand for recognition or certification,
to the Knowledge of CMHC, there are no existing organization drives, and there
are and have been no representation or certification proceedings or petitions
seeking a representation proceeding, with the National Labor Relations Board or
any other labor relations tribunal or authority, nor have any such demands,
proceedings or petitions been brought or filed or threatened to be brought or
filed within the past three (3) years.

(b) CMHC is currently in material compliance with, and during the last six years
there has been no material violation of, Applicable Law with respect to the
employment of individuals by, or the employment practices or work conditions of
CMHC or their respective terms and conditions of employment, wages and hours.
CMHC is not engaged in any unfair labor practice or other unlawful employment
practice (including under any immigration laws). Except as set forth on Schedule
3.19(b), there are no unfair labor practice charges or other employee related
complaints or claims against CMHC pending or, to the Knowledge of CMHC,
threatened before the National Labor Relations Board, the Equal Employment
Opportunity Commission, the Occupational Safety and Health Review Commission,
the Department of Labor, or any other Governmental Authority. CMHC has not been
notified in writing by any Governmental Authority of any alleged violation by
CMHC of Applicable Law that remains unresolved respecting employment and
employment practices, terms and conditions of employment, or wage and hours.

 
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(c) There is no existing, or to the Knowledge of CMHC, threatened, work
stoppage, strike, dispute, boycott, slowdown, lockout, picketing or other labor
problem involving employees of CMHC or related to the business or operations of
CMHC, nor, to the Knowledge of CMHC, have any such problems occurred or been
threatened within the past three years.

(d) CMHC has not received any written notice of the intent of any Governmental
Authority responsible for the enforcement of labor or employment laws to conduct
an investigation of CMHC, and, to the Knowledge of CMHC, no such investigation
is in progress.

(e) There are no outstanding Orders against CMHC under any occupational health
or safety legislation and, to the Knowledge of CMHC, none has been threatened.
All material levies, assessments and penalties made against CMHC pursuant to all
applicable workers compensation legislation as of the date hereof have been paid
by CMHC, unless subject to a good faith challenge or dispute by CMHC, and CMHC
has not been reassessed under any such legislation.
 
3.20 Benefit Plans.

(a) Schedule 3.20(a) hereto sets forth a true and complete list of each
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA) maintained
by CMHC or any trade or business under common control with CMHC within the
meaning of Section 4001(a)(14) of ERISA (each, an “ERISA Affiliate”) or to which
CMHC or an ERISA Affiliate contributes or is required to contribute, including
any multiemployer employee welfare benefit plan, on behalf of officers and
employees of CMHC (such multiemployer and other employee welfare benefit plans
being hereinafter collectively referred to as the “Welfare Benefit Plans”). With
respect to each Welfare Benefit Plan, all contributions or premiums due by, or
attributable to the period ending on, the Closing Date have been paid or accrued
and no such amounts are delinquent. Except for COBRA coverage, there are no
Welfare Benefit Plans or Benefit Arrangements that provide medical or death
benefits to current or former employees of CMHC beyond their retirement or
termination of employment. CMHC has furnished or made available to Netsmart
copies of each Welfare Benefit Plan, Pension Benefit Plan and Benefit
Arrangement, the most recent annual report and summary plan description for each
Welfare Benefit Plan, Pension Benefit Plan and Benefit Arrangement, where
applicable, and a written summary of each other Welfare Benefit Plan, Pension
Benefit Plan and Benefit Arrangement where no formal plan or summary exists.

 
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(b) Schedule 3.20(b) hereto sets forth a true and complete list of each
“employee pension benefit plan” (as defined in Section 3(2) of ERISA) maintained
by CMHC or an ERISA Affiliate or to which CMHC or an ERISA Affiliate contributes
or is required to contribute, including any multiemployer employee pension
benefit plan, on behalf of officers and employees of CMHC (such multiemployer
and other employee pension benefit plans being hereinafter collectively referred
to as the “Pension Benefit Plans”). No Pension Benefit Plan is a “defined
benefit plan” (as defined in Section 3(35) of ERISA). Neither CMHC nor any of
its ERISA Affiliates has any liability or potential liability under Title IV of
ERISA. With respect to each Pension Benefit Plan, all contributions due by or
attributable to the period ending on the date hereof have been made or accrued
on the Latest Balance Sheet.

(c) To the Knowledge of CMHC, each Pension Benefit Plan, each Welfare Benefit
Plan, each Benefit Arrangement and each related trust agreement and annuity
contract and insurance policy, where applicable, complies currently and has
complied in the past, both as to form and operation, with the provisions of
(A) the Code and, with respect to each Pension Benefit Plan, such provisions to
be tax qualified under Section 401(a) or 403(a) of the Code; (B) ERISA; and
(C) all other Applicable Laws; all necessary Government Approvals for the
Pension Benefit Plans have been obtained; and favorable determination letters,
copies of which have been made available to Netsmart, as to the qualification
under the Code of each of the Pension Benefit Plans, as amended, have been
received from the Internal Revenue Service.

(d) No Welfare Benefit Plan or Pension Benefit Plan or trustee or administrator
thereof has engaged in any transaction that might subject CMHC to a tax or
penalty under Section 4975 of the Code or a penalty under Section 502 of ERISA.
Each Welfare Benefit Plan and each Pension Benefit Plan and, where applicable,
each Benefit Arrangement has been administered to date in material compliance
with its terms, the requirements of the Code for favorable tax treatment, ERISA
and all other Applicable Laws and all reports required by any Government
Authority with respect to each Welfare Benefit Plan, each Pension Benefit Plan
and each Benefit Arrangement have been timely filed.

(e) Schedule 3.20(e) lists each material salary practice or arrangement and each
deferred compensation plan, bonus plan, stock option plan, incentive
compensation plan, employee stock purchase plan and any other employee benefit,
retirement savings, insurance, sick pay, vacation pay or severance pay plan,
agreement, arrangement or commitment or other compensatory plan or program,
whether formal or informal, which is applicable to any employee of CMHC in his
or her capacity as an employee of CMHC and not required under a previous
subsection to be listed on Schedule 3.20(a) or 3.20(b) maintained by CMHC or an
Affiliate with respect to any of CMHC’s employees (collectively, the “Benefit
Arrangements”). Copies or summaries of each Benefit Arrangement have been given
or made available to Netsmart.

(f) There are no Actions (other than routine claims for benefits) pending or, to
CMHC’s Knowledge, threatened against CMHC in connection with, or against, any
Pension Benefit Plan, Welfare Benefit Plan or Benefit Arrangement, and there are
no civil or criminal actions pending or, to CMHC’s Knowledge, threatened against
any fiduciary, Pension Benefit Plan, Welfare Benefit Plan or Benefit
Arrangement.

(g) Other than as set forth on Schedule 3.20(g), at Closing, there will be no
severance obligation due to any former or current employees of CMHC arising
solely as a result of the anticipated termination of any such employee from any
Welfare Benefit Plan, Pension Benefit Plan or Benefit Arrangement, except as to
such employees that will not continue to be employed after the Closing Date by
Netsmart or the Surviving Corporation.

 
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(h) Other than as set forth on Schedule 3.20(h), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will result in (a) any payment or transfer of money, property or other
consideration (including, without limitation, severance, unemployment
compensation or bonus payments) (whether or not such payment would constitute a
“parachute payment” or “excess parachute payment” within the meaning of Section
280G of the Code) becoming due to any employee or former employee of CMHC; (b)
any increase in the amount of compensation, benefits or fees payable to any such
individual; (c) the acceleration of the accrual, vesting or timing of payment of
any benefits, compensation or fees payable to any such individual; or (d) the
acceleration or creation of any other additional rights, under any Benefit
Arrangement, severance, parachute, employment, change in control or other
agreement or arrangement by or to which CMHC is a party that would reasonably be
expected to have a Material Adverse Effect on CMHC.
 
3.21 Litigation; Compliance; Permits.

(a) Schedule 3.21 lists all Actions pending or, to the Knowledge of CMHC,
threatened against, by or affecting CMHC, including, without limitation, those
which may prevent, hinder or delay the execution and performance of this
Agreement or of any of the transactions contemplated hereby, or could declare
this Agreement unlawful or cause the rescission of any of the transactions
hereunder.

(b) CMHC has been since January 1, 2001 and is in compliance with all Applicable
Law relating to its business, including, without limitation, relating to the
bidding for Government Contracts, except where the failure to be in compliance
with an Applicable Law has not had and would not reasonably be expected to have
a Material Adverse Effect on CMHC. CMHC is not subject to any Order relating to
its business which has resulted in, or would reasonably be expected to result in
Liability to CMHC of $50,000 or more. Since January 1, 2001, CMHC has not been
notified in writing by any Governmental Authority of any material violation by
it of any Applicable Law, and, to the Knowledge of CMHC, no investigation, or
audit or other proceeding by any Governmental Authority predicated upon an
alleged violation of Applicable Law is threatened.

(c) CMHC has all material licenses, franchises, permits, certificates, approvals
or other authorizations issuable by any Governmental Authority (collectively,
“Permits”) required for the lawful conduct of its business as conducted on the
Closing Date and for the ownership and use by CMHC of its assets and properties
in the manner in which it currently owns and uses such assets and properties,
all of which Permits are in full force and effect and listed on Schedule 3.21
hereto, together with the names of the Governmental Authority or other Person
issuing such Permits. There is no Action pending or, to the Knowledge of CMHC,
threatened, to terminate any rights under any Permits. CMHC has not received
written notice from any Governmental Authority or any other Person regarding any
actual, alleged, possible or potential contravention of any Permit. All
applications required to have been filed for the renewal of such Permits have
been duly filed on a timely basis with the appropriate Governmental Authorities,
and all other filings required to have been made with respect to such Permits
have been duly made on a timely basis with the appropriate Governmental
Authorities.
 
 
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3.22 Environmental Compliance.

(a) The Business Premises is currently, and all other properties when owned,
leased or occupied by CMHC were, in compliance with all Environmental Laws,
except where such non-compliance has not resulted in and would not reasonably be
expected to result in liability to CMHC of $25,000 or more;

(b) There has not been any Release or Hazardous Discharge (A) into, on, from or
under the Business Premises or any other real property when such property was
owned, leased or operated by CMHC or (B) to the Knowledge of CMHC, into, on or
under any other properties, including landfills, in which wastes generated or
transported by CMHC have been Released;

(c) There are no pending or, to the Knowledge of CMHC, threatened Environmental
Actions against CMHC or against any of the owners or operators of any facilities
that received solid waste or Hazardous Substances generated by CMHC in
connection with the operation of its business;

(d) None of the assets and properties which have been or are now owned, leased
or operated by CMHC, have been used by CMHC for the generation, storage,
manufacture, use, transportation, disposal or treatment of Hazardous Substances,
except in material compliance with Environmental Laws;

(e) CMHC currently maintains all environmental Permits (“Environmental Permits”)
necessary for the operation of its business and, except where the failure to do
so has not had, and would not reasonably be expected to have, a Material Adverse
Effect, CMHC has been and is in compliance with such Environmental Permits, and
there are no legal proceedings pending nor to the Knowledge of CMHC, threatened
revocations of such Environmental Permits;

(f) CMHC is not subject to any outstanding Order or a party to any agreement
with any Governmental Authority with respect to any Environmental Law or which
would require a Remedial Action;

(g) There are no Actions by any employee of CMHC pending or to the Knowledge of
CMHC, threatened, based on alleged injury to such employee’s health caused by
exposure to any Hazardous Substance; and

(h) Neither this Agreement nor the consummation of the transactions contemplated
by this Agreement will impose any obligations for site investigation or cleanup,
or to notify or obtain the consent of any Governmental Authority or third
parties under any Environmental Laws (including any so-called
“transaction-triggered” or “responsible property transfer” laws and
regulations).
 
 
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3.23 Absence of Material Liabilities.

CMHC has no material liabilities other than those (i) set forth on Schedule
3.23, (ii) disclosed in the most recent CMHC Financial Statement, or (iii)
incurred in the Ordinary Course of Business since the date of the most recent
CMHC Financial Statement.
 
3.24 Corporate Records.

The copy of the Articles of Incorporation of CMHC, and all amendments thereof to
date, certified by the Secretary of State of its jurisdiction of incorporation
and by the Secretary or an Assistant Secretary of CMHC, as applicable, and of
the Code of Regulations of CMHC, as amended to date, certified by the Secretary
or an Assistant Secretary of CMHC, as applicable, all as of a date not more than
five (5) days prior to the date hereof which have been or will be delivered to
Netsmart are in all material respects complete and correct.
 
3.25 Bank Accounts; Power of Attorney.

Schedule 3.25 hereto sets forth: (i) a list of all banks in which CMHC has an
account, lock box or safety deposit box, account number, purpose of such
account, lock box or safety deposit box and the names of all persons authorized
to draw thereon or have access thereto; and (ii) the names of all persons
holding powers of attorney from CMHC.
 
3.26 Warranties.

Schedule 3.26 contains a sample of the standard warranty given by CMHC with
respect to any of its products or services. Variations to such warranty have
been agreed to by CMHC from time to time, and such variations are set forth in
Government Contracts or Scheduled Contracts, which have been given or made
available to Netsmart. Schedule 3.26 also sets forth a description of all claims
in excess of $10,000 concerning product liability or performance failure or
arising from services provided which have been made in writing against CMHC.
Except as set forth on Schedule 3.26, there are no losses, claims, damages,
expenses or Liabilities (whether absolute, accrued, contingent or otherwise) of
CMHC asserted and arising out of or based upon incidents occurring on or prior
to the date hereof with respect to: (i) any product liability or any similar
claim that relates to any of the products designed, manufactured, produced,
distributed, supplied or sold by CMHC; (ii) the delivery of faulty services by
or on behalf of CMHC; or (iii) any claim for the breach of any express or
limited product warranty, or any similar claim that relates to any of CMHC’s
products or services, and, to the Knowledge of CMHC, there are no product or
service defects which are reasonably likely to give rise to any such losses,
claims, damages, expenses or Liabilities.
 
3.27 Brokers, Finders, etc.

Except as set forth on Schedule 3.27, neither CMHC nor, to the Knowledge of
CMHC, any shareholder of CMHC has dealt with or employed any broker, finder,
investment banker or financial advisor in connection with the negotiation,
execution or performance of this Agreement.
 
 
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3.28 Absence of Certain Business Practices.

Neither CMHC nor, to the Knowledge of CMHC, any other Person acting with
authority on behalf of CMHC, or for which any of them would have liability,
acting alone or together, has with respect to CMHC’s business: (i) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, Governmental
Authority, governmental employee or other Person with whom CMHC has done
business directly or indirectly in violation of Applicable Law; or (ii) directly
or indirectly in violation of Applicable Law given or agreed to give any gift or
similar benefit to any customer, supplier, trading company, shipping company,
Governmental Authority, governmental employee or other Person, which would
subject CMHC to damage or penalty in any civil, criminal or governmental Action,
except where any such violations or the disclosure thereof have not had, and
would not reasonably be expected to have, a Material Adverse Effect on CMHC.
CMHC has conducted its business in a manner that complies with the U.S. Foreign
Corrupt Practices Act.
 
3.29 Insurance.

Schedule 3.29 sets forth a true, correct and complete list, and a description of
the coverage provided thereby, of all insurance policies maintained by CMHC on
its assets or properties or in relation to its business. All of such policies
are in full force and effect. All premiums due on such insurance policies on or
prior to the date hereof have been paid. Except as set forth on Section 3.29,
there are no pending claims with respect to CMHC or its assets or properties
under any such insurance policies, and there are no claims as to which the
insurers have notified CMHC that they intend to deny liability. There is no
existing default by CMHC under any such insurance policies.
 
3.30 Information Technology.

Except as disclosed on Schedule 3.30:

(a) CMHC has made available to Netsmart an accurate list of all material
Information Technology owned or used by CMHC and in the conduct of CMHC’s
business and all material and currently in force agreements or arrangements
(including amendments and modifications thereto) relating to the maintenance and
support, security, disaster recovery management and utilization (including
facilities management, escrow agreements relating to the deposit of software
source codes and computer bureau services agreements) of the Information
Technology owned or used by CMHC in the conduct of its business.

(b) All Information Technology currently used in connection with CMHC’s business
is either owned or leased or licensed to CMHC. During the past three (3) years,
no notice of a material defect has been sent or received by CMHC in respect of
any license or lease under which CMHC receives Information Technology.

(c) The Information Technology owned or used by CMHC in the conduct of its
business has the capacity and performance necessary to fulfill the requirements
it currently performs.

 
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(d) CMHC has not been notified in writing of any breach of any of the agreements
or arrangements referred to in Section 3.30(a) and, to the Knowledge of CMHC,
CMHC is not in breach of any of the agreements or arrangements referred to in
Section 3.30(a).

(e) CMHC has access to the source codes for all software owned by it.

(f) None of the records, systems, controls, and/or data used by CMHC to conduct
its business is recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic, mechanical
or photographic process whether computerized or not) which are not under the
exclusive ownership and control of CMHC.
 
3.31 Related Party Transactions.

Except as set forth on Schedule 3.31, no Related Party has any direct or
indirect interest in any material asset used in or otherwise relating to CMHC’s
business. Except as set forth on Schedule 3.31, no Related Party has entered
into any material contract, transaction or business dealing with CMHC. To the
Knowledge of CMHC, no Related Party is competing with CMHC.
 
3.32 Sales Order Backlog.

Schedule 3.32 contains a true, complete and accurate reflection of the Sales
Backlog of CMHC as of June 30, 2005 based on bona fide orders received from
customers of CMHC and, to the Knowledge of CMHC, none of the orders included in
the backlog have been cancelled.
 
3.33 Change of Control Payments.

Except as disclosed on Schedule 3.33, there are no contract, arrangements or
agreements in effect which provide for any amount to become due or payable to
current or former officers, directors or any CMHC employee as a result of, or in
connection with, the consummation of the transactions contemplated by this
Agreement.

3.34 Net Working Capital.

The Final Net Working Capital will not be less than a negative $7.5 million.
 
3.35 Disclosure.

No representation or warranty by CMHC contained in this Agreement, in the
accompanying schedules or in any certificate delivered in accordance with the
terms hereof contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances in which they were made, not
misleading.
 
 
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NETSMART AND ACQUISITION

Netsmart and Acquisition, jointly and severally, represent and warrant to CMHC
as follows:
 
4.1 Organization and Authority.

Netsmart is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with all requisite corporate power and
authority to own, operate and lease its properties and assets and to carry on
its business as now conducted. Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio with
all requisite corporate power and authority to own, operate and lease its
properties and assets and to carry on its business as now conducted. Acquisition
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement, has been engaged in no other business activities, has
conducted operations only as contemplated hereby and has no material
liabilities. Netsmart and Acquisition are duly licensed or qualified to do
business and are in good standing in each jurisdiction in which they are
required to be so qualified or licensed, except where failure to be so qualified
or licensed would not have, and would not reasonably be expected to have, a
Material Adverse Effect on Netsmart. Netsmart has previously delivered to CMHC
correct and complete copies of the Certificate of Incorporation and Bylaws of
Netsmart and the Articles of Incorporation and Regulations of Acquisition, each
of which as so delivered is in full force and effect.
 
4.2 Authority for Agreements.

Each of Netsmart and Acquisition has the requisite corporate power and authority
to execute, deliver and enter into this Agreement and each of the Related
Agreements to which each of them is a party and to perform its respective
obligations under this Agreement and each of the Related Agreements to which it
is a party. The execution, delivery and performance by each of Netsmart and
Acquisition of this Agreement and each of the Related Agreements to which each
of them is a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Netsmart and Acquisition. This Agreement has been, and the Related
Agreements to which it is a party will be, duly executed and delivered by each
of Netsmart and Acquisition, and each does and will constitute the binding
obligation of Netsmart and Acquisition, respectively, enforceable against it in
accordance with its terms, except as the enforcement thereof may be subject to
or limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights generally now or
hereafter in effect and subject to the application of equitable principles and
the availability of equitable remedies.
 
4.3 Capital Stock.

(a) Netsmart. The authorized, issued and outstanding capital stock of Netsmart
is set forth on Schedule 4.3. All of the outstanding capital stock of Netsmart
has been duly authorized and is validly issued, fully paid and nonassessable.
All outstanding capital stock of Netsmart was issued in compliance with the
Certificate of Incorporation and Bylaws of Netsmart and with Applicable Law.
Except as disclosed in the Netsmart SEC Reports, there are no rights (whether by
law, preemption, contracts or otherwise), subscriptions, warrants, options,
conversion rights, commitments, understandings, arrangements or agreements of
any kind authorized or outstanding to purchase or otherwise acquire from
Netsmart, any capital stock, or other securities or obligations of any kind
convertible into or exchangeable for any capital stock Netsmart or any other
equity interest in Netsmart. There has been no material change in such
capitalization since March 31, 2005, other than the issuance of Netsmart Common
Stock upon the exercise of options and warrants in the ordinary course since
such date. Except as set forth on Schedule 4.3, there are no obligations,
contingent or otherwise, of Netsmart to repurchase, redeem or otherwise acquire
any shares of Netsmart common stock. The Netsmart Common Stock to be issued in
exchange for the CMHC Shares in the Merger, when issued in accordance with the
terms of this Agree-ment, will be duly authorized, validly issued, fully paid
and non-assessable and subject to no preemptive rights.

 
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(b) Acquisition. The authorized capital stock of Acquisition consists of 1500
shares of common stock, .001 par value, all of which shares, as of the date of
this Agreement, are validly issued and outstanding, fully paid and nonassessable
and are owned by Netsmart free and clear of all liens and encumbrances.

(c) No Shares of CMHC. Neither Netsmart nor any of its subsidiaries (including
Acquisition) or other Affiliates beneficially owns any CMHC Shares.
 
4.4 No Conflicts.

Except as set forth on Schedule 4.4, the execution, delivery and performance of
this Agreement and the Related Agreements, any other agreement or certificate
contemplated herein or therein and the consummation of the transactions
contemplated hereby and thereby: do not and will not; (i) with or without the
giving of notice or the passage of time or both, violate or conflict with or
result in a breach of any provision of the Certificate of Incorporation or
Bylaws of Netsmart or the Articles of Incorporation or Regulations of
Acquisition; (ii) require the consent, waiver, approval, license, designation or
authorization of, or registration, declaration or filing with, any Person or
Governmental Authority; and (iii) with or without the giving of notice or the
passage of time or both, (a) violate or conflict with, or (b) result in a
material breach or termination of, or (c) constitute a material default under,
or grounds for the modification or cancellation of, or (d) result in the
imposition of any penalty or revocation or suspension of rights under, or (e)
accelerate or permit the acceleration of the performance required by, or (f)
result in the creation of any Liens, except Permitted Liens, upon any of the
material assets of Netsmart or Acquisition, or otherwise give rise to any
Liability under, any material agreement, mortgage, deed of trust, indenture,
license, permit or any Order, or any statute or regulation to which Netsmart or
Acquisition is a party or by which Netsmart, Acquisition or any of their
respective its assets may be bound or governed.
 
4.5 Litigation.

There are no Actions pending, or, to the Knowledge of Netsmart, threatened
against, by or affecting Netsmart, Acquisition or any of their respective
stockholders, officers or directors in which, individually or in the aggregate,
an unfavorable determination could (i) prevent, hinder or delay the execution
and performance of this Agreement or any of the transactions contemplated
hereby, (ii) declare this Agreement unlawful, (iii) cause the rescission of any
of the transactions hereunder or require Netsmart to divest itself of the Shares
or (iv) except as disclosed in the Netsmart SEC Reports, reasonably be expected
to have a Material Adverse Effect on Netsmart.
 
 
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4.6 Brokers, Finders, etc.

Except as set forth on Schedule 4.6, neither Netsmart nor Acquisition has dealt
with or employed any broker, finder, investment banker or financial advisor in
connection with the negotiation, execution or performance of this Agreement.

4.7 Provisions for Merger Consideration.

Netsmart has, and shall have as of the Closing Date, (i) sufficient funds with
which to pay the Cash Consideration and consummate the transactions contemplated
by this Agreement, and (ii) sufficient shares available for the issuance of the
Stock Consideration.

4.8 SEC Reports and Financial Statements.

(a)  Since January 1, 2003, Netsmart has filed with the SEC all forms, reports,
schedules, registration statements, and other documents (together with all
amendments thereof and supplements thereto) (as such documents have since the
time of their filing been amended or supplemented, the “Netsmart SEC Reports”)
required to be filed by Netsmart with the SEC. As of their respective dates and
giving effect to any amendments or supplements thereto filed prior to the date
of this Agreement, the Netsmart SEC Reports (i) complied as to form in all
material respects with the requirements of the Securities Act, and the rules and
regulations thereunder, or the Exchange Act, and the rules and regulations
thereunder, as the case may be, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(b)  The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in Netsmart SEC Reports (the “Netsmart Financial Statements”)
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments) the consolidated financial position of Netsmart and
its consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. Each subsidiary of Netsmart is treated as a consolidated
subsidiary of Netsmart in Netsmart Financial Statements for all periods covered
thereby.

 
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4.9 Absence of Changes.

Since June 30, 2005, (i) the businesses of Netsmart and its Affiliates have been
conducted only in the Ordinary Course of Business; (ii) there has been no change
in the financial condition, assets, liabilities, business, operations, or
affairs of Netsmart other than changes in the Ordinary Course of Business, none
of which singly, and no combination of which in the aggregate has had, or would
reasonably be expected to have, a Material Adverse Effect on Netsmart; and (iii)
to the Knowledge of Netsmart, there is no threatened occurrence or development
which would reasonably be expected to have a Material Adverse Effect on
Netsmart.

4.10 Disclosure.

No representation or warranty by Netsmart of Acquisition contained in this
Agreement, in the accompanying schedules or in any certificate delivered in
accordance with the terms hereof contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
made herein or therein, in the light of the circumstances in which they were
made, not misleading.
 
ARTICLE V
COVENANTS AND AGREEMENTS
 
5.1 Covenants and Agreements of CMHC.

CMHC covenants and agrees with Netsmart and Acquisition as follows:

(a) Shareholder Approval. Unless this Agreement has been earlier terminated in
accordance with its terms, CMHC will, through its Board of Directors, duly call,
give notice of, convene and hold a meeting of its shareholders (the “CMHC
Shareholders’ Meeting”) for the purpose of, among other things, voting on the
adoption of this Agreement and the appointment of the Securities Holders’
Representative under this Agreement as soon as reasonably practicable after the
date hereof. Subject to the exercise of fiduciary obligations as advised in
writing by outside counsel, the Company shall, through its Board of Directors,
recommend that the CMHC Shareholders adopt this Agreement and shall use
commercially reasonable efforts to obtain such adoption.

(b) Conduct of Business. Except (x) as expressly contemplated or permitted by
this Agreement, (y) to the extent that Netsmart or Acquisition shall otherwise
previously consent in writing or (z) to the extent set forth on Schedule 5.1(b),
between the date of this Agreement and the Effective Time:

(i) CMHC will not engage in any activities or transactions which will be outside
the Ordinary Course of Business;

(ii) CMHC will not (a) subdivide or reclassify any shares of its capital stock,
(b) issue any shares of its capital stock or securities convertible into its
capital stock, other than the issuance of CMHC Shares pursuant to the exercise
of CMHC Stock Options and CMHC Stock Warrants outstanding on the date of this
Agreement and in accordance with their present economic terms or as required to
be amended by the terms of the Stock Option Purchase Agreement(s) or Stock
Warrant Purchase Agreement(s), as the case may be, or (c) amend its Articles of
Incorporation or Code of Regulations;

 
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(iii) CMHC will afford to the officers, attorneys, accountants and other
authorized representatives of Acquisition and Netsmart reasonable access to its
plants, properties, books, tax returns and minute books and other corporate
records upon reasonable prior notice and during normal business hours in order
that Acquisition and Netsmart may have full opportunity to make such
investigation as Acquisition and Netsmart shall desire of the affairs of CMHC.
If for any reason the Merger is not consummated, Acquisition and Netsmart will
return to CMHC any of CMHC’s documents, records or materials (and any copies
thereof) and will cause confidential information of CMHC and its Affiliates
obtained in connection with such investigation to be treated as confidential.
Any such information or material obtained pursuant to this Section 5.1(b)(iii)
that constitutes “Confidential Information” (as such term is defined in the
Confidentiality Agreement dated as of June 30, 2005 between CMHC and Netsmart
(the “Confidentiality Agreement”)) shall until the Closing be governed by the
terms of the Confidentiality Agreement, and until the Closing Netsmart shall
comply with, and shall cause Acquisition to comply with, the terms of the
Confidentiality Agreement.

(iv) CMHC will not take any action to institute any new severance or termination
pay practices with respect to any directors, officers, or employees of CMHC or
increase the benefits payable under its severance or termination pay practices
in effect on the date hereof;

(v) CMHC will not adopt or amend, in any material respect, except as may be
required by Applicable Law, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund,
plan or arrangement for the benefit or welfare of any directors, officers or
employees of CMHC or, in the case of stock options, except as required to be
amended by the terms of the Stock Option Purchase Agreement(s);

(vi) CMHC will use commercially reasonable efforts to maintain its relationships
with its suppliers and customers, and if requested by Acquisition or Netsmart,
(a) CMHC will attempt to make reasonable arrangements for representatives of
Acquisition or Netsmart to meet with suppliers and customers of CMHC (but only
with the participation of CMHC’s management), and (b) CMHC shall schedule, and
the management of CMHC may participate in, meetings of representatives of
Acquisition or Netsmart with employees of CMHC;

(vii) CMHC will maintain all of its properties in customary repair, order and
condition, reasonable wear and tear excepted, and will maintain insurance upon
all of its properties and with respect to the conduct of its business in such
amounts and of such kinds comparable to that in effect on the date of this
Agreement;

(viii) CMHC will maintain its books, accounts and records in the usual, regular
and ordinary manner, on a basis consistent with Past Practice;

 
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(ix) CMHC will duly comply in all material respects with all Applicable Law
pertaining to it and to the conduct of its business;

(x) no change shall be made in the banking and safe deposit arrangements of CMHC
existing on the date hereof and no powers of attorney shall be granted by CMHC;

(xi) CMHC will not acquire or agree to acquire by merging or consolidating with,
purchasing substantially all of the assets of or otherwise, any business or any
corporation, partnership, association, or other business organization or
division thereof;

(xii) CMHC will promptly advise Acquisition and Netsmart in writing of any
event, transaction, circumstance or condition which has had or would reasonably
be expected to have a Material Adverse Effect on CMHC and/or which causes any of
the representations or warranties made by CMHC herein to become untrue,
incorrect or misleading in any material respect;

(xiii)  CMHC will not make or change any election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to
CHMC, surrender any right to claim a refund of Taxes, consent to any extension
or waiver of the limitation period applicable to any Tax claim or assessment
relating to CMHC, or take any other similar action relating to the filing of any
Tax Return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other actions would have
the effect of increasing the Tax liability of CMHC for any period ending after
the Effective Time or decreasing any Tax attribute of CMHC existing at the
Effective Time; and

(xiv) to the extent not set forth above, CMHC will not engage in any of the
transactions described in Section 3.9 of this Agreement.

(c) Stock Options. After the date hereof, CMHC will not issue any stock options
under the CMHC Systems, Inc. 1999 Stock Option Plan or otherwise.

(d) Acquisition Proposals/No Solicitation by CMHC. (i) From and after the date
of this Agreement until the earlier of the Effective Time or termination of this
Agreement pursuant to its terms, CMHC shall not, and shall cause its
Representatives (as hereinafter defined) not to, directly or indirectly:

(1) initiate, solicit, encourage or knowingly facilitate (including by way of
furnishing information or assistance) any inquiries or expressions of interest
or the making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, (x) a proposal or offer with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase directly or indirectly (including by way of lease, exchange, sale,
mortgage, pledge, tender offer, exchange offer or otherwise, as may be
applicable) of the assets of or equity interests (in economic or voting power)
in CMHC, in each case, other than a proposal or offer made by Netsmart or an
Affiliate thereof, or (y) a breach of this Agreement or any interference with
the completion of the Merger (any of the foregoing inquiries, expressions of
interest, proposals or offers being hereinafter referred to as an “Acquisition
Proposal”);

 
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(2) have any discussions with or provide any nonpublic information or data to
any person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal;

(3) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal;

(4) approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger agreement,
asset purchase or share exchange agreement, option agreement or other similar
agreement (other than a confidentiality agreement to the extent permitted by
this Section 5.1(d)); or

(5) agree to do any of the foregoing related to any Acquisition Proposal.

(ii) Notwithstanding the foregoing, CMHC and its Board of Directors shall be
permitted to (A) make any disclosures as to factual matters that are required by
Applicable Law or which its Board of Directors, after consultation with outside
counsel, determines in good faith is required in the exercise of its fiduciary
duties under Applicable Law, (B) effect a Change in CMHC Recommendation (as
hereinafter defined) or (C) engage in any discussions or negotiations with, or
provide nonpublic information or data to, any person in response to an
unsolicited bona fide written Acquisition Proposal by any such person first made
after the date of this Agreement, if and only to the extent that, in any such
case referred to in clause (B) or (C):

(1) CMHC has complied in all material respects with this Section 5.1(d);

(2) the Board of Directors of CMHC, after consultation with outside counsel,
determines in good faith that such action is required in the exercise of its
fiduciary duties under Applicable Law;

(3) in the case of clause (B) above, (I) if CMHC has received an unsolicited
bona fide written Acquisition Proposal from a third party, the Board of
Directors of CMHC concludes in good faith that such Acquisition Proposal
constitutes a Superior Proposal (as hereinafter defined) after giving effect to
all of the adjustments which may be offered by Netsmart pursuant to clause (III)
below, (II) CMHC has notified Netsmart, at least three business days in advance,
of the intention to effect a Change in CMHC Recommendation, specifying the
material terms and conditions of any such Superior Proposal and furnishing to
Netsmart a copy of the relevant proposed transaction agreements with the party
making such Superior Proposal and other material documents and (III) prior to
effecting such a Change in CMHC Recommendation, CMHC has negotiated, and has
caused its financial and legal advisors to, negotiate with Netsmart in good
faith to make such adjustments in the terms and conditions of this Agreement as
would enable CMHC to proceed with the Merger and the other transactions
contemplated hereby without violating the Board of Directors’ fiduciary duties
under Applicable Law;

 
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(4) in the case of clause (C) above, the CMHC Board of Directors concludes in
good faith that there is a reasonable likelihood that such Acquisition Proposal
will constitute a Superior Proposal, and prior to providing any nonpublic
information or data to any person in connection with the Acquisition Proposal,
the Board of Directors receives from such Person an executed confidentiality
agreement having provisions that are no less favorable to CMHC than those
contained in the Confidentiality Agreement between CMHC and Netsmart; and

(5) CMHC promptly (and in any event prior to providing any nonpublic information
or data to any person or entering into discussions or negotiations with any
person) notifies Netsmart of such inquiries, proposals or offers received by,
any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, it or any of its Representatives
indicating, in connection with such notice, the identity of such person and the
material terms and conditions of any inquiries, proposals or offers (including a
copy thereof if in writing and any related documentation or correspondence).
CMHC agrees that it will advise Netsmart of any material developments (including
any changes in such terms and conditions) with respect to such inquiries,
proposals or offers as promptly as practicable after the occurrence thereof.

(iii) Subject to clause (ii) above, CMHC agrees that it will immediately cease
and cause its subsidiaries, and its and their Representatives, to cease any and
all existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal (other than those
with Netsmart contemplated by this Agreement), and shall use its best efforts to
cause any such third parties in possession of nonpublic information about it or
any of its subsidiaries that was furnished by or on its behalf in connection
with any of the foregoing to return or destroy all such information in the
possession of any such third party or in the possession of any Representative of
any such third party, and it will not release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which it or any of
its subsidiaries is a party with respect to any Acquisition Proposal.

(iv) As used herein, the following terms shall have the meanings set forth
below:

(1) As used herein, a “Change in CMHC Recommendation” means any withdrawal,
modification or qualification in any manner adverse to Netsmart the
recommendation by CMHC Board of Directors or any committee thereof of the Merger
or this Agreement.

(2) As used herein, “Superior Proposal” means an unsolicited bona fide written
Acquisition Proposal which the CMHC Board of Directors concludes in good faith,
after consultation with its financial advisors and legal advisors, taking into
account material legal, financial, regulatory and other aspects of the proposal
and the person making the proposal (including any break-up fees, expense
reimbursement provisions and conditions to consummation), (i) is more favorable
to the Securities Holders of CMHC, from a financial point of view, than the
transactions contemplated by this Agreement, (ii) is from a Person that, in the
written belief of CMHC’s financial advisor, is financially capable of
consummating such proposal, (iii) is not subject to any condition the
fulfillment of which, in the good faith judgment of CMHC Board of Directors, is
not probable, and (iv) is not subject to any financing contingencies.

 
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(v) If CMHC (A) observes the covenants set forth in this Section 5.1(d) and is
authorized to effect a Change in CMHC Recommendation and thereafter terminates
this Agreement, or (B) fails to observe the covenants set forth in this Section
5.1(d), in either of which events the Merger is not consummated, CMHC shall
become obligated and liable to pay Netsmart, as liquidated damages, the sum of
$1,000,000.

(e) Financial Statements. CMHC will deliver to Netsmart all regularly prepared
audited and unaudited financial statements of CMHC prepared after the date
hereof in the format historically used internally, promptly after same are
available.

(f) Certification of Shareholder Vote. On or prior to the Closing Date, CMHC
shall deliver to Acquisition and Netsmart a certificate of its secretary setting
forth the number of CMHC Shares outstanding and entitled to vote on the adoption
of this Agreement and approval of the Merger, the number of CMHC Shares voted in
favor of adoption of this Agreement and approval of the Merger, and the number
of CMHC Shares voted against adoption of this Agreement and approval of the
Merger.
 
5.2 Covenants and Agreements of Netsmart and Acquisition.

Except (x) as expressly contemplated or permitted by this Agreement, (y) to the
extent that CMHC shall otherwise previously consent in writing, between the date
of this Agreement and the Effective Time:

(a) declare, set aside, make or pay any dividend or other distribution (whether
in cash, stock, or property or any combination thereof) in respect of any of its
capital stock; or

(b) take or agree to take any action which would make any of the representations
or warranties of Netsmart or Acquisition contained in this Agreement untrue,
incorrect or misleading in a material respect or prevent Netsmart or Acquisition
from performing or cause Netsmart or Acquisition not to perform their respective
covenants hereunder.

(c) Netsmart and Acquisition will promptly advise CMHC in writing of any event,
transaction, circumstance or condition which has or is reasonably likely to have
a Material Adverse Effect on Netsmart or Acquisition and/or which causes any of
the representations or warranties made by Netsmart of Acquisition herein to
become untrue, incorrect or misleading in any material respect.
 
5.3 Other Covenants and Agreements.

(a) Further Action; Consents; Approvals. Upon the terms and subject to the
conditions contained herein, CMHC and Netsmart shall each use their respective
commercially reasonable efforts (i) to take or cause to be taken all actions
necessary, proper or advisable to consummate and make effective as promptly as
reasonably practicable the transactions contemplated by this Agreement and the
Related Agreements, and (ii) to obtain all Permits, Orders, consents, waivers,
approvals or authorizations, if any, required by any Governmental Authority or
under any contract, obligation or commitment to which any of them may be subject
in connection with the Merger (it being understood that CMHC shall not be acting
in a commercially unreasonable manner if it refuses to pay third Persons any
money or other consideration, or refuses to agree to contractual concessions, in
order to obtain any consent, waiver, approval or authorization required under
any contract, obligation or commitment to which CMHC is a party), and CMHC and
Netsmart shall make all filings with any Governmental Authorities required in
connection with the authorization, execution and delivery of this Agreement by
CMHC, Acquisition and Netsmart and the consummation by them of the transactions
contemplated hereby. CMHC and Netsmart shall furnish promptly to the other party
all information concerning itself required to be included in a proxy statement,
prospectus or the Registration Statement or for any application or other filing
to be made pursuant to the Applicable Law of any Governmental Authority in
connection with the transactions contemplated by this Agreement.

 
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(b) Expenses. Except as set forth on Schedule 5.3(b), each of CMHC, Netsmart and
Acquisition shall bear their own respective fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby and in
connection with all obligations required to be performed by each of them under
this Agreement, regardless of whether the Merger is consummated or the Closing
occurs; provided however, if the Merger is consummated, the Securities Holders
shall be responsible for the payment of all of the following fees and expenses:
(i) the fees and expenses of legal counsel to CMHC related to the negotiation
and consummation of the transactions contemplated by this Agreement; (ii) the
fees and expenses of any investment banker to CMHC related to the negotiation
and consummation of the transactions contemplated by this Agreement, including
but not limited to, all fees and expenses payable to Crowe Capital Markets, LLC
under the agreement dated April 22, 2005; (iii) the fees and expenses of
accountants to CMHC related to the providing of advice regarding the tax effects
of the transactions contemplated by this Agreement; and (iv) as set forth on
Schedule 5.3(b), the severance and other payments to be made at the Closing to
each of the Key Employees listed on Schedule 5.3(b) whose employment will be
terminated on the Closing Date and whose right to receive such payments under
their employment agreements with CMHC will have matured as a result of the
change in control that occurs when the Merger is consummated (“Change in Control
Payments”) (collectively, the “Shareholder Expenses”). Except for the payments
described in Section 2.10 of this Agreement, (x) neither CMHC, Surviving
Corporation, Acquisition nor Netsmart shall pay any of the Shareholder Expenses
in connection herewith, and (y) any such amounts so paid shall be refunded to
Surviving Corporation by the Securities Holders at the Closing or from the
Escrow Fund in the manner provided herein or in the Escrow Agreement.

(c) Covenant of Netsmart. Netsmart hereby covenants and agrees with CMHC that
Netsmart shall cause Acquisition to perform and comply with all of its covenants
and agreements contained in this Agreement.

(d) Minute Books, Stock Books and Corporate Records. The minute books, Articles
of Incorporation, Code of Regulations, share certificate and transfer books,
share ledgers, financial and other corporate records and the corporate seal of
CMHC, if any, shall be delivered to Acquisition by CMHC on or before the Closing
Date.

 
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(e) Registration and Listing of Netsmart Shares. Pursuant to the terms of the
Registration Rights Agreement to be executed and delivered at the Closing,
Netsmart shall use commercially reasonable efforts to cause to be filed with the
SEC within 30 days of the Effective Time, a registration statement (the
“Registration Statement”) with respect to the resale by the Securities Holders
of the Netsmart Common Stock to be issued to them in the Merger.

(f) Benefit Plans. As of the Effective Time, the entity, whether Netsmart or the
Surviving Corporation, by which CMHC’s employees are employed shall have the
option of continuing some or all of the Welfare Benefit Plans, Pension Benefit
Plans and Benefit Arrangements for such periods as Netsmart shall determine. To
the extent that any such Welfare Benefit Plans, Pension Benefit Plans or Benefit
Arrangements are not continued on or after the Effective Time, all employee
benefit plans or programs of Netsmart or Surviving Corporation in which CMHC’s
employees participate after such date shall, (i) to the extent allowable by
Applicable Law, including the Health Insurance Portability and Accountability
Act, provide coverage for pre-existing health conditions to the extent covered
under the applicable plans or programs of CMHC as of the Effective Time, (ii)
provide employees of the Surviving Corporation credit for their prior service
with CMHC for eligibility and vesting purposes and for vacation accrual
purposes, and (iii) to the extent that any such change in welfare benefit plan
coverage for any group of CMHC employees occurs other than at the end of the
accounting period of the plan (for which deductible amounts and co-payments are
determined), recognize expenses and claims that were incurred by CMHC’s
employees under CMHC’s plans as of the date of change, for purposes of computing
deductible amounts and co-payments.
 
5.4 Shareholders Voting Agreement.

Concurrently herewith, the Significant Shareholder is entering into an agreement
with Netsmart, Acquisition and CMHC (the “Shareholders Voting Agreement”)
relative to (i) such Shareholder’s covenant to vote its CMHC Shares in favor of
adoption of this Agreement and authorization of the Merger, and (ii) such
Shareholder’s title to its CMHC Shares.
 
5.5 Net Working Capital Adjustment.

(a) Within ninety (90) days following the Effective Time, Netsmart shall prepare
and deliver to the Securities Holders’ Representative an unaudited balance sheet
of CMHC as of the Closing Date immediately prior to Closing (“Proposed Closing
Balance Sheet”), which shall include a statement of Net Working Capital as of
the Closing Date immediately prior to Closing (“Proposed Closing Working Capital
Statement”). The Proposed Closing Balance Sheet and Proposed Closing Working
Capital Statement shall be prepared in accordance with GAAP and shall be
consistent with Past Practice. The Proposed Closing Balance Sheet shall present
fairly in all material respects the financial condition of CMHC as of that date.

 
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(b) The Securities Holders’ Representative and one independent certified public
accountant or firm designated by the Securities Holders’ Representative shall
have the right to observe the work performed by Netsmart and/or its
Representatives in connection with the preparation of the Proposed Closing
Balance Sheet and Proposed Closing Working Capital Statement, to examine and
make copies of the work papers and other documents generated or reviewed in
connection with the preparation of the Proposed Closing Balance Sheet and
Proposed Closing Working Capital Statement and to access the books and records
of CMHC related to the preparation of the Proposed Closing Balance Sheet and
Proposed Closing Working Capital Statement.

(c) (i) If the Proposed Closing Working Capital Statement reflects Net Working
Capital equal to or above a deficit of $7.5 Million Dollars and, in accordance
with the 5.5(c)(iv), such Statement becomes final and binding on Netsmart, then
within five (5) business days following the earlier of (x) the expiration of the
Review Period (without a Notice of Disagreement having been delivered to
Netsmart) or (y) the receipt by Netsmart of a written statement from the
Securities Holders’ Representative agreeing to the calculation, the Net Working
Capital Adjustment Fund shall be paid to the Securities Holders entitled to
receive a portion of such amount by the Escrow Agent in accordance with the
terms of the Escrow Agreement.

(ii) The Securities Holders’ Representative shall have thirty (30) days after
the receipt of the Proposed Closing Balance Sheet and Proposed Closing Working
Capital Statement (“Review Period”) to review the Proposed Closing Balance Sheet
and Proposed Closing Working Capital Statement, the work papers and other
documents generated or reviewed by Netsmart in connection with the preparation
of the Proposed Closing Balance Sheet and Proposed Closing Working Capital
Statement, and the books and records of CMHC related to the preparation of the
Proposed Closing Balance Sheet and the Proposed Closing Working Capital
Statement.

(iii) If, within the Review Period, the Securities Holders’ Representative
disputes any item(s) on the Proposed Closing Balance Sheet or Proposed Closing
Working Capital Statement, the Securities Holders’ Representative shall give
Netsmart written notice of such disagreement prior to the expiration of the
Review Period specifically identifying the item(s) and amount(s) in dispute and
the basis for such dispute (the “Notice of Disagreement”).

(iv) If the Securities Holders’ Representative either does not deliver a Notice
of Disagreement to Netsmart or otherwise manifests in writing his agreement with
such calculation prior to the expiration of the Review Period, Netsmart’s
Proposed Closing Balance Sheet and Proposed Closing Working Capital Statement
shall be deemed final and binding on Netsmart, the Surviving Corporation, the
Securities Holders’ Representative and the Securities Holders for all purposes
of this Agreement.

(v) The parties shall use commercially reasonable efforts to reach agreement
with respect to such disputed items within thirty (30) days following the
delivery of the Notice, or such longer period as may be agreed upon by the
parties (the “Resolution Period”). If Netsmart and the Securities Holders’
Representative mutually agree upon the Proposed Closing Balance Sheet and the
Proposed Closing Working Capital Statement within the Resolution Period, such
agreement shall be conclusive and binding on all parties. Any item(s) on the
Proposed Closing Balance Sheet or Proposed Closing Working Capital Statement not
specifically identified in writing as a disputed item before the end of the
Review Period, shall be deemed to have been accepted by the Securities Holders’
Representative and shall not be subject to any further dispute, review or
change.

 
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(d) If the parties fail to resolve any disputes with respect to the Proposed
Closing Balance Sheet and/or Proposed Closing Working Capital Statement within
the Resolution Period, the unresolved dispute(s) shall be submitted for
resolution within ten (10) days after the expiration of the Resolution Period
to, and finally determined by, Grant Thornton LLP (the “Accounting Firm”), which
shall act as expert and not as arbitrator and whose determination shall be final
and binding. The Accounting Firm’s determination of such dispute(s) shall be
made in a manner consistent with the principles set forth in this Section 5.5 in
a written, reasoned opinion delivered not later than forty-five (45) days after
the submission of the same to such Accounting Firm. The Accounting Firm shall
allocate its costs associated with such determination equally between Netsmart
and the Securities Holders’ Representative. Any such determination shall be
final and binding. The Proposed Closing Balance Sheet and the Proposed Closing
Working Capital Statement as mutually agreed to by Netsmart and the Securities
Holders’ Representative or otherwise finally determined shall be referred to as
the “Closing Balance Sheet” and the “Final Working Capital Determination”.

(e) If the amount of Net Working Capital determined pursuant to the Final
Working Capital Determination (the “Final Net Working Capital” and the date of
such determination being the “Determination Date”) decreases below a deficit of
$7.5 Million Dollars, then, within five (5) business days following the
Determination Date, the amount of such difference (the “Reduction Amount”),
shall be paid to Netsmart by the Escrow Agent in accordance with the terms of
the Escrow Agreement. The Reduction Amount shall be treated for income tax
purposes as an adjustment to the Merger Consideration. To the extent that the
Reduction Amount is less than the full amount of the Net Working Capital
Adjustment Fund, then, within five (5) business days following the Determination
Date, the amount of the difference between the full amount of the Net Working
Capital Adjustment Fund and the Reduction Amount shall be paid to the Securities
Holders’ entitled to receive a portion of such amount on a Pro Rata Percentage
basis in accordance with the terms of the Escrow Agreement.

(f) If the Final Net Working Capital increases above a deficit of $7.5 Million
Dollars, then, within two (2) business days following the Determination Date,
Netsmart shall deposit with the Payment Agent the amount of such increase (the
“Increased Amount”), and within five (5) business days following the
Determination Date, the Increased Amount shall be distributed by the Payment
Agent to the Securities Holders entitled to receive a portion of such amount on
a Pro Rata Percentage basis. This distribution shall constitute the Contingent
Net Working Capital Distribution as described in Article II of this Agreement.
In addition, if (i) the Net Working Capital Adjustment Fund has not been
disbursed pursuant to Section 5.5(c)(i), and (ii) if the Final Net Working
Capital reflects an Increased Amount or reflects that there is neither an
Increased Amount nor a Reduction Amount, then, within five (5) business days
following the Determination Date, the Escrow Agent shall distribute to the
Securities Holders entitled thereto the Net Working Capital Adjustment Fund on a
Pro Rata Percentage basis in accordance with the terms of the Escrow Agreement.
The Increased Amount shall be treated for income tax purposes as an adjustment
to the Merger Consideration.

 
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5.6 Public Announcements.

Netsmart and CMHC shall consult with each other before issuing any press
releases with respect to this Agreement, the transactions contemplated hereby
and/or the performance of the obligations required to be performed by either or
both of them hereunder, and none of the parties hereto shall issue any other
press release or make any public statement pertaining to this Agreement or the
transactions contemplated herein prior to obtaining the other party’s written
approval, which approval shall not be unreasonably withheld or delayed, except
that no such approval shall be necessary to the extent disclosure may be
required, in the written opinion of their respective securities counsel, by
Applicable Law or applicable stock exchange rules or any listing agreement of
any party hereto.

5.7 Indemnification; Directors’ and Officers’ Insurance.

(a) From and after the Effective Time, Netsmart shall cause the Surviving
Corporation to indemnify, advance expense to, and hold harmless the present and
former officers and directors of CMHC and its Affiliates in respect of their
acts or omissions in their capacity as officers and directors occurring prior to
the Effective Time to the fullest extent provided or permitted under (i) CMHC’s
or any Affiliate’s Articles (or Certificate) of Incorporation or Code of
Regulations (or Bylaws) on the date of this Agreement, or (ii) the OGCL. From
and after the Effective Time, the Surviving Corporation shall be liable to pay
and perform in a timely manner all such obligations.

(b) Netsmart and the Surviving Corporation shall, for a period of not less than
three (3) years after the Effective Time, use its best efforts to cause to be
maintained in effect, at no cost to the beneficiaries thereof, the policies of
directors’ and officers’ liability insurance maintained by CMHC and its
Affiliates as of the date hereof (or policies of at least the same coverage and
amounts containing terms that are no less advantageous to the insured parties
without any gaps or lapses in coverage) with respect to acts or omissions
occurring prior to the Effective Time; provided, however, that Netsmart and the
Surviving Corporation shall not be required to pay premiums in excess of $49,800
for such insurance over such three-year period; provided further, that if the
existing director and officer liability insurance expires, is terminated or
canceled during such three-year period, the Surviving Corporation will use its
best efforts to obtain as much director and officer liability insurance as can
be obtained for the same cost for the remainder of such period.

(c) The obligations of Netsmart and the Surviving Corporation under this Section
5.7 shall survive the consummation of the Merger and shall not be terminated or
modified in such a manner as to adversely affect any indemnified party to whom
this Section 5.7 applies without the consent of such affected indemnified party
(it being expressly agreed that the indemnified parties to whom this Section 5.7
applies shall be third party beneficiaries of this Section 5.7, each of whom may
enforce the provisions of Section 5.7).

(d) If Netsmart or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that the
successors and assigns of Netsmart or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 5.7.

 
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ARTICLE VI
CONDITIONS PRECEDENT
 
6.1 Conditions to Obligations of Netsmart and Acquisition.

Consummation of the Merger and the other transactions contemplated hereby is
subject to the fulfillment (or waiver by Acquisition or Netsmart) on or prior to
the Closing Date, of the following conditions, which CMHC agrees to use its
commercially reasonable efforts to cause to be fulfilled:

(a) Representations, Performance. The representations and warranties contained
in Article III hereof shall be true at and as of the Closing Date with the same
force and effect as if they had been made at and as of such date, except (i) as
affected by the transactions contemplated hereby, (ii) for those representations
and warranties which address matters only as of a particular date (which shall
be true as of such date), and (iii) where the failure to be so true has not had,
and would not reasonably be expected to have, a Material Adverse Effect, after
the Effective Time, on the Surviving Corporation. CMHC shall have duly performed
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. CMHC shall have delivered to Acquisition a
certificate dated the Closing Date to the effect set forth above in this Section
6.1(a).

(b) Shareholder Approval. Adoption of this Agreement and approval of the Merger
by the Shareholders as required by Applicable Law and by any applicable
provisions of CMHC’s Articles of Incorporation or Code of Regulations shall have
been obtained.

(c) Consents and Approvals. All required consents, licenses, Permits, approvals,
authorizations, qualifications or Orders necessary for the consummation of the
Merger or any of the other transactions contemplated hereby, including under any
of the Scheduled Contracts and under any Netsmart bank loan agreement shall have
been obtained, except for any consents required under the contracts identified
in Items 1 or 2 of Schedule 3.5 and except for those for which failure to obtain
such consents, licenses, Permits, approvals, authorizations, qualifications or
Orders would not have a Material Adverse Effect, after the Effective Time, on
the Surviving Corporation.

(d) Litigation. No temporary restraining order, preliminary or permanent
injunction or other Order issued by a court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect. No Action shall be pending or threatened which has had or is
reasonably likely to have a Material Adverse Effect on CMHC.

(e) Shareholders Agreements. Except for the Shareholders Voting Agreement, or as
otherwise set forth on Schedule 6.1(e) all shareholder agreements, voting
trusts, proxies, agreements, arrangements or understandings of any kind which
restrict or limit the ability to transfer, the right to vote or otherwise affect
any of the CMHC Shares or other securities of CMHC shall have been terminated,
cancelled, rescinded and of no further force and effect.

 
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(f) Escrow Agreement. The Escrow Agent, the Securities Holders’ Representative,
Netsmart and the other signatories thereto shall have executed and delivered to
each other the Escrow Agreement.

(g) CMHC Stock Options. The holders of all CMHC Stock Options shall have
executed and delivered Stock Option Cancellation Agreements and, between the
date of this Agreement and the Closing Date, without the prior written consent
of Netsmart, no holder of a CMHC Stock Option shall have exercised any CMHC
Stock Option.

(h) CMHC Stock Warrants. The holders of all CMHC Stock Warrants shall executed
and delivered Stock Warrant Exchange Agreements.

(i) Opinion of Counsel. Netsmart and Acquisition shall have received an opinion,
addressed to Netsmart and Acquisition and dated the Closing Date, of Vorys,
Sater, Seymour and Pease LLP, counsel for CMHC, in the form reasonably
satisfactory to counsel for Netsmart.

(j) Employment, Consulting and Retention Agreements. Each of the employees of
CMHC identified on Schedule 6.1(j) shall have executed and delivered, as
described in Schedule 6.1(j), either an employment agreement, consulting
agreement or retention agreement, as the case may be, with the economic terms
described in such schedule for each such Person and with the form of such
agreement being substantially in the form most recently delivered to such
Persons before the date of this Agreement.

(k) Good-Standing Certificate. Acquisition shall have received a certificate as
of a date not more than 5 days prior to the Closing Date attesting to the good
standing of CMHC as a corporation in its jurisdiction of incorporation by the
Secretary of State of such jurisdiction.

(l) Lease. The Partnership shall have executed and delivered the New Lease.

(m) FIRPTA Certificate. Netsmart shall have received a statement meeting the
requirements of Treasury Regulation section 1.1445-2(c)(3) that CMHC is not, and
has not been during the applicable period specified in Code section
897(c)(1)(a), a United States real property holding corporation, as defined in
Code section 897(c)(2).

(n) Severance Agreements. Each Key Employee shall have entered into a severance
and release agreement in respect of the payments being made to such Key
Employees that are described in Schedule 5.3(b).
 
 
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(o) Silicon Valley Bank. CMHC shall have received adequate assurance from
Silicon Valley Bank that, upon payment of all outstanding amounts due under the
Silicon Valley Bank loan, Silicon Valley Bank will release its Liens on the
assets of the Company.
 
6.2 Conditions to Obligations of CMHC.

Consummation of the Merger and the other transactions contemplated hereby is
subject to the fulfillment (or waiver by CMHC), on or prior to the Closing Date,
of the following conditions, which Netsmart and Acquisition agree to use their
commercially reasonable efforts to cause to be fulfilled:

(a) Representations, Performance. The representations and warranties of Netsmart
and Acquisition contained in Article IV hereof and in any certificate delivered
in connection herewith shall be true at and as of the Closing Date with the same
force and effect as if they had been made at and as of such date, except (i) as
affected by the transactions contemplated hereby, (ii) for those representations
and warranties which address matters only as of a particular date (which shall
be true as of such date), and (iii) where the failure to be so true has not had,
and would not reasonably be expected to have, a Material Adverse Effect on
Netsmart or, after the Effective Time, on the Surviving Corporation. Netsmart
and Acquisition shall have duly performed and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date. Each of
Netsmart and Acquisition shall have delivered to CMHC and the Securities
Holders’ Representative an officer’s certificate dated the Closing Date to the
effect set forth above in this Section 6.2(a).

(b) Shareholder Approval. Adoption of this Agreement and approval of the Merger
by the shareholders of CMHC, Netsmart and Acquisition to the extent required by
Applicable Law or by any applicable provisions of the respective Certificate or
Articles of Incorporation or Bylaws or Regulations shall have been obtained.

(c) Consents and Approvals. All required consents, licenses, Permits, approvals,
authorizations, qualifications or Orders necessary for the consummation of the
Merger or any of the other transactions contemplated hereby, including under any
Netsmart bank loan agreement shall have been obtained, except where the failure
to obtain such consents, licenses, Permits, approvals, authorizations,
qualifications or Orders would not have a Material Adverse Effect on Netsmart
or, after the Effective Time, on the Surviving Corporation.

(d) Litigation. No temporary restraining order, preliminary or permanent
injunction or other Order issued by a court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect. No Action shall be pending or threatened which has had or is
reasonably likely to have a Material Adverse Effect on Netsmart.

(e) Escrow Agreement. The Escrow Agent, the Securities Holders’ Representative,
Netsmart and the other signatories thereto shall have executed and delivered to
each other the Escrow Agreement.

 
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(f) Opinion of Counsel. CMHC and the Securities Holders’ Representative shall
have received an opinion, addressed to them and dated the Closing Date, of
Kramer, Coleman, Wactlar & Lieberman, P.C., counsel for Netsmart and
Acquisition, in the form reasonably satisfactory to counsel for CMHC.

(g) Employment, Consulting and Retention Agreements. Each of the employees of
CMHC identified on Schedule 6.1(j) shall have executed and delivered, as
described in Schedule 6.1(j), either an employment agreement, consulting
agreement or retention agreement, as the case may be, with the economic terms
described in such schedule for each such Person and with the form of such
agreement being substantially in the form most recently delivered to such
Persons before the date of this Agreement.

(h) Good-Standing Certificates. Netsmart and Acquisition shall have delivered to
CMHC and the Securities Holders’ Representative a certificate as of a date not
more than five (5) days prior to the Closing Date attesting to the good standing
of Netsmart and Acquisition as corporations in their respective jurisdiction of
incorporation.

(i) Registration Rights Agreement and Related Questionnaires. Netsmart and the
Securities Holders’ Representative shall have executed and delivered to each
other the Registration Rights Agreement, in the form attached hereto as Exhibit
A (the “Registration Rights Agreement”), and the Securities Holders shall have
delivered to Netsmart the duly completed and executed Questionnaires (as defined
in the Registration Rights Agreement).
 
ARTICLE VII
DEFINITIONS
 
7.1 Definition of Certain Terms.

As used herein, the following terms shall have the following meanings:

Accounting Firm: as defined in Section 5.5(d).

Acquisition: as defined in the preamble to this Agreement.

Acquisition Common Shares: as defined in Section 2.1(a).

Acquisition Proposal: as defined in Section 5.1(d)(i).

Action:  means any pending civil, criminal or administrative claim, demand,
complaint, protest, charge, proceeding, suit, action, hearing or investigation
(and appeals therefrom) before any Governmental Authority or other judicial or
administrative tribunal or body and/or any officer thereof.

Affiliate: with respect to any Person, any Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person. The
term “control” (including, with correlative meaning, the terms “controlled by”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 
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Agreement: as defined in the preamble to this Agreement.

Applicable Law: means, with respect to any Person, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, regulation or Order of
any Governmental Authority applicable to such Person or any of its Affiliates or
any of their respective properties, assets, officers, directors or employees (in
connection with such officer’s, director’s or employee’s activities on behalf of
such Person or any of its Affiliates).  

Basket: as defined in Section 8.8(a).

Benefit Arrangements: as defined in Section 3.20(e).

Business Premises: as defined in Section 3.11(b).

Cash Consideration: shall mean the amount determined from the following
calculation: (a) $13,822,576 minus the aggregate amount payable to holders of
cancelled CMHC Stock Options under Section 2.1(e)(1)(A) of this Agreement, with
the resulting number divided by 964,546. The amount determined from the
foregoing calculation shall be expressed in U.S. Dollars and shall be rounded to
the nearest cent.

Cash Consideration Per Share Reduction Amount: shall mean the sum of the
Holdback Per Share Amount and the Closing Payment Per Share Amount.

Certificate of Merger: as defined in Section 1.2(b).

Change in CMHC Recommendation: as defined in Section 5.1(d)(iv).

Change in Control Payments: as defined in Section 5.3(b).

Claim Threshold: as defined in Section 8.8(c).

Closing: as defined in Section 1.2(a).

Closing Balance Sheet: as defined in Section 5.5(d).

Closing Date: as defined in Section 1.2(a).

Closing Payment Per Share Amount: means the quotient of the sum of the
Shareholder Expenses (including the Change in Control Payments) divided by the
sum of (x) the aggregate number of the issued and outstanding CMHC Shares
entitled to receive Cash Consideration per share pursuant to Section 2.1(c)(i);
(y) the aggregate number of CMHC Shares that were the subject of cancelled CMHC
Stock Options; and (z) the aggregate number of CMHC Shares that were the subject
of the cancelled CMHC Stock Warrants. The amount determined from the foregoing
calculation shall be expressed in U.S. Dollars and shall be rounded to the
nearest cent.

 
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CMHC: as defined in the preamble to this Agreement.

CMHC Certificates: a certificate or certificates which immediately prior to the
Effective Time represented outstanding CMHC Shares.

CMHC Share: shall mean a common share, without par value, of CMHC.

CMHC Shareholders’ Meeting: as defined in Section 5.1(a).

CMHC Stock Options: as defined in Section 2.1(e).

CMHC Stock Warrants: as defined in Section 2.1(f).

Code: the Internal Revenue Code of 1986, as amended, together with the U.S.
Treasury rulings and regulations promulgated thereunder.

Confidentiality Agreement: as defined in Section 5.1(b)(iii).

Constituent Corporations: as defined in Section 1.1.

Contingent Net Working Capital Distribution: shall mean an amount of cash that
Netsmart shall cause to be paid on a per share basis on the terms and conditions
set forth in this Agreement to (i) each holder of CMHC Shares in respect of each
CMHC Share that is converted into the right to receive the Merger Consideration
as of the Effective Time, (ii) each holder of a cancelled CMHC Stock Option in
respect of each CMHC Share that was the subject of such cancelled option, as
contemplated by Section 2.1(e) and (iii) each holder of a cancelled CMHC Stock
Warrant in respect of each CMHC Share that was the subject of such cancelled
warrant, as contemplated by Section 2.1(f).  The amount payable on a per share
basis shall be determined by dividing the Increased Amount (as defined in
Section 5.5(f) of this Agreement and determined in accordance with this
Agreement) by the number of fully diluted CMHC Shares as of the Closing Date
(i.e., is 1,088,491, comprised of (a) the number of issued and outstanding CMHC
Common Shares as of the date of this Agreement (895,998), (b) the number of CMHC
Shares that are currently the subject of CMHC Stock Options (123,945) and (c)
the number of CMHC Shares that are currently the subject of CMHC Stock Warrants
(68,548)). The amount determined from the foregoing calculation shall be
expressed in U.S. Dollars and shall be rounded to the nearest cent.

Copyright: as defined in the definition of Intellectual Property, below.

Determination Date: as defined in Section 5.5(e).

Dissenting Share: as defined in Section 2.1(d).

Effective Time: as defined in Section 1.3.

 
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Environmental Action: refers to any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state, local or municipal agency,
department, bureau, office or other authority or any third party involving a
Hazardous Discharge or any violation of any order, permit or Environmental Laws.

Environmental Law: each and every applicable federal, state, local and foreign
law, statute, ordinance, regulation, rule, judicial or administrative order or
decree, permit license, approval, authorization or similar requirement of each
and every federal, and pertinent state, local and foreign governmental agency or
other governmental authority, pertaining to the protection of human health and
safety or the environment including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. 9601
et set, the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901 et
seq., the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601 et seq., the Water
Pollution Control Act (FWPCA), 33 U.S.C. 1251 et seq., and the Occupational
Safety and Health Act (OSHA), 42 U.S.C. 655.

Environmental Liability: any and all Liabilities, damages, losses, penalties,
fines, and Liens incurred: (i) to comply with, or by reason of, the violation of
any Environmental Law; (ii) to investigate, evaluate, respond to, remediate or
otherwise which result from, the Release or threatened Release of Hazardous
Substances or the existence of contamination in, on, under, to, from or about
any properties formerly or currently owned, leased or operated by CMHC, (iii) by
reason of any injury to any Person, property or the natural resources caused by,
or resulting from any environmental conditions present at any properties
formerly or currently owned, leased or operated by CMHC or created by or arising
out of the current or former operation of CMHC or any prior owner or operator of
a facility or site at which CMHC operates, has operated or disposes or has
disposed of Hazardous Substances.

Environmental Permits: as defined in Section 3.22(v).

ERISA: the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate: as defined in Section 3.20(a).

Escrow Agent: means the escrow agent to be appointed for the Escrow Agreement as
mutually agreed upon by Netsmart, Acquisition and CMHC prior to the Closing.

Escrow Agreement: means the Escrow Agreement among the Escrow Agent, the
Securities Holders’ Representative, and Netsmart and Surviving Corporation in
the form attached hereto as Exhibit B and such other form requested by the
Escrow Agent and mutually agreed to by Netsmart, Acquisition and CMHC prior to
the Closing.

Escrow Amount: as defined in Section 2.9.

Escrow Fund: shall mean (a) the Securities Holders’ Indemnity Fund, (b) the Net
Working Capital Adjustment Fund, and (c) the Reimbursement Fund.

Exchange Act: means the Securities Exchange Act of 1934, as amended.

 
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Final Net Working Capital: as defined in Section 5.5(e).

Final Working Capital Determination: as defined in Section 5.5(d).

Financial Statements: the audited consolidated financial statements of CMHC, as
at and for the years ended March 31, 2004 and 2005 and the unaudited
consolidated financial statements of CMHC, as at and for the quarter ended June
30, 2005, which financial statements include, in each case, a balance sheet, a
statement of operations, a statement of shareholders’ equity and a statement of
cash flows.

GAAP: means accounting principles generally accepted in the United States of
America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

Governmental Authority: means any federal, state, local or foreign governmental
authority, quasi governmental authority, court, regulatory or administrative
organization or agency, commission and tribunal or a department, branch or
division of any of the foregoing.

Government Contracts: as defined in Section 3.15(a).

Hazardous Discharge: means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping of Hazardous Substances which violates Environmental Laws.

Hazardous Substance: means any substance, compound, chemical or element which is
(i) defined or classified as a hazardous substance, hazardous material, toxic
substance, hazardous waste, pollutant or contaminant under any Environmental
Law, or (ii) a petroleum hydrocarbon, including crude oil or any fraction
thereof, (iii) hazardous, toxic, corrosive, flammable, explosive, infectious,
radioactive, carcinogenic or a reproductive toxicant, or (iv) regulated pursuant
to any Environmental Law. The term “Hazardous Substance” shall also include
asbestos-containing materials and manufactured products containing Hazardous
Substances.

Holdback Per Share Amount: shall mean $2.16, of which (a) $1.93 shall be
allocated to the Securities Holders Indemnity Fund, (b) $0.09 shall be allocated
to the Net Working Capital Adjustment Fund and (c) $0.14 shall be allocated to
the Reimbursement Fund.

Increased Amount: as defined in Section 5.5(f).

Indemnified Party: a party hereto or other Person designated herein entitled to
indemnification under this Agreement.

Indemnifying Party: shall mean, as the case may be, (a) Netsmart or (b) the
Securities Holders, acting through the Securities Holders’ Representative, where
either is required to provide indemnification under this Agreement.

 
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Information Technology: means all computer hardware, software, networks,
microprocessors, firmware, and other information technology and communications
equipment currently used by CMHC in the operation of the information technology
systems of CMHC’s business.

Intellectual Property: means all intellectual property owned, used or licensed
(as licensor or licensee) by CMHC that is used in its business, or in any
products, service, technology or process currently offered or sold within the
last three years by CMHC or in its business, or currently under development by
CMHC for use in connection with its business, including: (i) all domestic and
foreign copyright interests in any original work of authorship, whether
registered or unregistered, including but not limited to all copyright
registrations or foreign equivalent, all applications for registration or
foreign equivalent, all moral rights, all common-law rights, and all rights to
register and obtain renewals and extensions of copyright registrations, together
with all other copyright interests accruing by reason of international copyright
convention (collectively, “Copyrights”); (ii) all domestic and foreign patents
(including certificates of invention and other patent equivalents), provisional
applications, patent applications and patents issuing therefrom as well as any
division, continuation or continuation in part, reissue, extension,
reexamination, certification, revival or renewal of any patent, all Inventions
and subject matter related to such patents, in any and all forms (collectively,
“Patents”); (iii) all domestic and foreign trademarks, trade dress, service
marks, trade names, icons, logos, slogans, and any other indicia of source or
sponsorship of goods and services, designs and logotypes related to the above,
in any and all forms, all trademark registrations and applications for
registration related to such trademarks (including, but not limited to intent to
use applications), and all goodwill related to the foregoing (collectively,
“Trademarks”); (iv) any formula, design, device or compilation, or other
information which is used or held for use by a business, which gives the holder
thereof an advantage or opportunity for advantage over competitors which do not
have or use the same, and which is not generally known by the public (“Trade
Secrets”) - Trade Secrets can include, by way of example, formulas, algorithms,
market surveys, market research studies, information contained on drawings and
other documents, and information relating to research, development or testing;
(v) novel devices, processes, compositions of matter, methods, techniques,
observations, discoveries, apparatuses, machines, designs, expressions, theories
and ideas, whether or not patentable; (vi) scientific, engineering, mechanical,
electrical, financial, marketing or practical knowledge or experience useful in
the operation of CMHC’s business; (vii) (A) any and all computer programs and/or
software programs (including all source code, object code, firmware, programming
tools and/or documentation), (B) machine readable databases and compilations,
including any and all data and collections of data, and (C) all content
contained on Internet site(s) (collectively, “Software”); (viii) all
documentation and media constituting, describing or relating to the above,
including memoranda, manuals, technical specifications and other records
wherever created throughout the world; and (ix) the right to sue for past,
present, or future infringement and to collect and retain all damages and
profits related to the foregoing.

Inventory: as defined in Section 3.12.

Key Employees: shall mean Alistair John Deakin, Michael Morgan, Michael Payne,
David Kersys, Michael Littman and Zackary Zettler.

 
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Knowledge: means (a) with respect to CMHC, the actual knowledge, after
reasonable inquiry, of John Paton, Alistair Deakin and Michael Payne and (b)
with respect to either Netsmart or Acquisition, the actual knowledge, after
reasonable inquiry, of James Conway, Kevin Scalia and Anthony Grisanti and shall
be deemed to include a representation by CMHC or Netsmart, as the case may be,
that one or more of such individuals made reasonable inquiry on behalf of CMHC
or Netsmart, as the case may be, in respect of matters that are qualified by
knowledge of CMHC, Netsmart or Acquisition.

Latest Balance Sheet: means the unaudited Balance Sheet of CMHC as at June 30,
2005.

Latest Balance Sheet Date: means June 30, 2005.

Lease: as defined in Section 3.11(b).

Liability: means with respect to any Person, any liability or obligation of such
Person of any kind, character, or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise.

License: as defined in Section 3.16(b).

Lien: means with respect to any asset, any mortgage, title defect, encumbrance,
pledge, charge, security interest, hypothecation or other lien.

Loss(es): as defined in Section 8.3.

Majority in Interest: as defined in Section 9.4.

March 31, 2005 Balance Sheet: as defined in Section 5.5(a).

Material Adverse Effect: with respect to any Person means any material adverse
change in the business, properties, results of operations, financial condition
or current prospects of such Person or its business, taken as a whole; provided,
however, that any change resulting from economic conditions applicable to
businesses in the United States generally or to software companies in the
market(s) in which products and services are offered by CMHC shall not be
considered in any determination of a material adverse change except to the
extent CMHC or Netsmart, as the case may be, is disproportionately affected
adversely thereby.

Material/Service Agreements: as defined in Section 3.14(a).

Merger: as defined in the recitals to this Agreement.

Merger Consideration: as defined in Section 2.1(c).

Netsmart: as defined in the preamble to this Agreement.

 
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Netsmart Common Stock: shall mean the common stock of Netsmart, par value $.01
per share.

Netsmart Financial Statements: as defined in Section 4.8(b).

Netsmart Indemnified Parties: as defined in Section 8.3.

Netsmart SEC Reports: as defined in Section 4.8(a).

Netsmart Tax Return(s): as defined in Section 4.10.

Net Working Capital: shall mean for purposes of Section 5.5, as of the Closing
Date, the current assets of CMHC (including cash) less its current liabilities
(including amounts outstanding under its line of credit and short term notes)
and long term indebtedness, but (a) excluding Shareholder Expenses (including
Change in Control Payments) which shall not be taken into consideration and (b)
a credit shall be provided for all fees and expenses paid by CMHC or that are
accrued by CMHC in respect of services rendered by Saltz, Shamis & Goldfarb, and
(c) if any CMHC Stock Warrants are exercised on or after the date hereof, the
proceeds received by CMHC from such exercise shall be excluded.

Net Working Capital Adjustment Fund: together with all interest earned thereon,
the sum of (i) a cash amount equal to the product of (x) the aggregate number of
the issued and outstanding CMHC Shares entitled to receive Cash Consideration
under Section 2.1(c)(i) and (y)$0.09, (ii) a cash amount equal to the product of
(x) the aggregate number of CMHC Shares that were the subject of the cancelled
CMHC Stock Options and (y)$0.09, and (iii) a cash amount equal to the product of
(x) the aggregate number of CMHC Shares that were the subject of the cancelled
CMHC Stock Warrants and (y)$0.09.

New Lease: the lease for the Business Premises between CMHC and the Partnership
dated the Closing Date in the form attached as Exhibit C hereto.

Notice of Disagreement: as defined in Section 5.5(c)(iii).

OGCL: as defined in Section 1.1.

Order: means any order, writ, injunction, directive, judgment, determination,
decree, ruling, assessment or award of any Governmental Authority.

Ordinary Course of Business: means the ordinary course of business consistent
with past custom and practice.

Option Cancellation Agreements: the agreements pursuant to which the holders of
CMHC Stock Option agree to the cancellation of their CMHC Stock Option in
exchange for the payment, after the Effective Time, of the amounts set forth in
Section 2.1(e) of this Agreement.

Option Cash Consideration: shall mean the sum of: (a) $13.23 and (b) the amount
resulting from the product of (1) 49,578 and (2) Volume Weighted Average Price
of Netsmart Common Stock, which product is divided by 123,945. The amount
determined from the foregoing calculation shall be expressed in U.S. Dollars and
shall be rounded to the nearest cent.

 
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Partnership: means 570 Metro Place North Limited Partnership, an Ohio limited
partnership, which is not owned by CMHC and which is not being acquired by
Netsmart or Acquisition in connection with the transactions contemplated by this
Agreement.

Past Practice: means the practices and procedures used by CMHC during the
three-year period ended March 31, 2005.

Patent: as defined in the definition of Intellectual Property, above.

Payment Agent: as defined in Section 2.2(a).

Payment Fund: as defined in Section 2.2(a).

Pension Benefit Plans: as defined in Section 3.20(b).

Permits: as defined in Section 3.21(c).

Permitted Lien: means with respect to CMHC:

(a) Liens for Taxes not yet delinquent or which are being contested in good
faith by appropriate proceedings diligently pursued, provided that adequate
reserves for the full payment of all such Taxes have been maintained on the
Financial Statements in accordance with and as required by GAAP;

(b) mechanics’, materialmen’s, banker’s, carriers’, warehousemen’s and similar
Liens arising in the Ordinary Course of Business and securing obligations of
such Person that are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case of any
such contest adequate reserves for the full payment of such Liens have been
maintained on the Financial Statements in accordance with and as required by
GAAP;

(c) Liens arising in connection with worker’s compensation, unemployment
insurance, old age pensions and social security benefits and similar statutory
obligations which are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case of any
such contest adequate reserves for the full payment of such Liens have been
maintained on the Financial Statements in accordance with and as required by
GAAP;

(d) (i) Liens incurred in the Ordinary Course of Business to secure the
performance of obligations under Applicable Law arising in connection with
progress payments or advance payments due under contracts with a Governmental
Authority entered into in the Ordinary Course of Business and (ii) Liens
incurred or deposits made in the Ordinary Course of Business to secure the
performance of obligations under Applicable Law, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar obligations
(exclusive of obligations incurred in connection with the borrowing of money,
any lease-purchase arrangements or the payment of the deferred purchase price of
property) , provided that adequate reserves for the full payment of all such
obligations set forth in clauses (i) and (ii) have been maintained on the
Financial Statements in accordance with and as required by GAAP;

 
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(e) survey exceptions, easements, reservations or rights-of-way for utilities
and other similar purposes which do not materially interfere with the business
of CMHC as it is currently conducted;

(f) interests of lessors in leased property, including filings for notification
purposes; and

(g) Liens securing executory obligations under leases of any real property
including the Business Premises.

Person: any natural person, firm, partnership, limited liability company,
association, corporation, trust, public body or government or other legal
entity.

Proposed Closing Balance Sheet: as defined in Section 5.5(a).

Proposed Closing Working Capital Statement: as defined in Section 5.5(a).

Pro Rata Percentage: means, with respect to a Securities Holder, the quotient,
in percentage form, of (a) the aggregate number of (i) CMHC Shares from which
the Securities Holder is entitled to receive Merger Consideration under Section
2.1(c), (ii) CMHC Shares that are the subject of the Option Cancellation
Agreements executed and delivered by such Securities Holder and (iii) CMHC
Shares that are the subject of Warrant Exchange Agreements executed and
delivered by such Securities Holder, divided by (b) the aggregate number of (i)
CMHC Shares entitled to receive Merger Consideration under Section 2.1(c),(ii)
CMHC Shares that are the subject of the Option Cancellation Agreements executed
and delivered by any Securities Holder and (iii) CMHC Shares that are the
subject of Warrant Exchange Agreements executed and delivered by any Securities
Holder.

PTO: as defined in Section 3.16(g).

Reduction Amount: as defined in Section 5.5(e).

Registration Rights Agreement: as defined in Section 6.2(j).

Registration Statement: as defined in Section 5.3(e).

Regulations: as defined in Section 1.4.

Reimbursement Fund: together with all interest earned thereon, the sum of (i) a
cash amount equal to the product of (x) the aggregate number of the issued and
outstanding CMHC Shares entitled to receive Cash Consideration under Section
2.1(c)(i) and (y)$0.14, (ii) a cash amount equal to product of (x) the aggregate
number of CMHC Shares that were the subject of the cancelled CMHC Stock Options
and (y) $0.14, and (iii) a cash amount equal to the product of (x) the aggregate
number of CMHC Shares that were the subject of the cancelled CMHC Stock Warrants
and (y) $0.14.

 
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Related Agreements: the Escrow Agreement, the Shareholders Voting Agreement, the
Registration Rights Agreement and the New Lease.

Related Party: means (i) each Person who owns beneficially or of record at least
10% of the outstanding CMHC Shares; (ii) each individual who is an officer or
director of CMHC; (iii) each Affiliate of any of the Persons referred to in
clauses (i) or (ii) above; (iv) any trust or other Person (other than the CMHC)
in which any one of the individuals referred to in clauses (i), (ii) and (iii)
above holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity interest.

Release: means any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching, or
migration on or into the indoor or outdoor environment or in, on, under, into or
out of any property including any property currently or at any time previously
owned, leased or operated by CMHC.

Remedial Action: means those response actions, including any investigation,
testing or monitoring activities required by Environmental Law or by any
Governmental Authority to clean up, remove, contain, treat, investigate or abate
any Hazardous substance or in connection with any property (including, without
limitation, actions to address Releases of Hazardous Substances to the
environment).

Representative: means, with respect to any Person, any officer, director,
employee, Affiliate, agent, representative or advisor, including any investment
banker, attorney or accountant retained by such person or any of its
subsidiaries.

Resolution Period: as defined in Section 5.5(c)(v).

Review Period: as defined in Section 5.5(c)(ii).

Scheduled Contract(s): as defined in Section 3.14(b).

SEC: means the United States Securities and Exchange Commission.

Secretary of State: as defined in Section 1.3.

Securities Act: means the Securities Act of 1933, as amended.

Securities Holders: unless the context otherwise requires, shall mean,
collectively, all Shareholders and all holders of CMHC Stock Options and CMHC
Stock Warrants immediately prior to the Effective Time.

Securities Holders’ Indemnity Fund: together with all interest earned thereon,
the sum of (i) a cash amount equal to the product of (x) the aggregate number of
the issued and outstanding CMHC Shares entitled to receive Cash Consideration
under Section 2.1(c)(i) and (y) $1.93, (ii) a cash amount equal to product of
(x) the aggregate number of CMHC Shares that were the subject of the cancelled
CMHC Stock Options and (y) $1.93, and (iii) a cash amount equal to the product
of (x) the aggregate number of CMHC Shares that were the subject of the
cancelled CMHC Stock Warrants and (y)$1.93.

 
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Securities Holders’ Indemnity Obligations: shall mean the obligations of the
Securities Holders to indemnify Netsmart, Surviving Corporation and their
respective Affiliates and all other Persons identified in Section 8.3 for Losses
pursuant to Article VIII hereof, which obligations are limited to amounts in the
Securities Holders’ Indemnity Fund.

Securities Holders’ Representative: as defined in Section 9.1.

Shareholder Expenses: as defined in Section 5.3(b).

Shareholders: unless the context otherwise requires, shall mean the shareholders
of the CMHC Shares immediately prior to the Effective Time.

Shareholders Voting Agreement: as defined in Section 5.4.

Significant Shareholder: shall mean the following Shareholder: John Paton.

Software: as defined in the definition of Intellectual Property, above.

Stock Consideration: shall mean 0.45175 shares of Netsmart Common Stock.

Stock Option Purchase Agreement(s): means the Stock Option Purchase Agreements
that may be entered into between John Paton and any one or more of the current
holders of CMHC Stock Options.

Superior Proposal: as defined in Section 5.1(d)(iv).

Surviving Corporation: as defined in Section 1.1.

Surviving Corporation Common Shares: as defined in Section 2.1(a).

Tax(es): shall mean any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.

Tax Law: as defined in Section 2.9.

Tax Return: shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

Termination Date: as defined in Section 10.1(b).

 
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Trademark: as defined in the definition of Intellectual Property, above.

Trade Secret: as defined in the definition of Intellectual Property, above.

Volume Weighted Average Price of Netsmart Common Stock: shall mean the volume
weighted average price of a share of Netsmart Common Stock during the period of
10 trading days immediately preceding the second day prior to the Closing Date.
As used in this definition, “trading days” shall mean days on which actual
trades of Netsmart Common Stock occur.

Warrant Exchange Agreements: the agreements pursuant to which the holders of
CMHC Stock Warrants agree to the cancellation of their CMHC Stock Warrants in
exchange for the payment, after the Effective Time, of the amounts set forth in
Section 2.1(f) of this Agreement.

Warrant Purchase Agreement(s): means the Warrant Purchase Agreements that may be
entered into between John Paton and any one or more of the current holders of
CMHC Stock Warrants.

Welfare Benefit Plans: as defined in Section 3.20(a).
 
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; TAX MATTERS
 
8.1 Survival of Representations and Warranties.

Except as expressly provided in this Agreement, all representations and
warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall not terminate, but shall survive the
Closing and continue in effect until eighteen months following the Closing Date;
provided, however, that representations and warranties under: (i) Section 3.4
(Capital Stock) shall remain in effect for so long as permitted by Applicable
Law, (ii) Section 3.7 (Taxes) shall remain in effect until the expiration of the
applicable statute of limitations, and (iii) Section 3.22 (Environmental) shall
remain in effect until six (6) years following the Closing Date; and, further,
provided that any such representations or warranties as to which a claim shall
have been asserted during such survival period shall continue in effect until
such time as such claim shall have been resolved or settled.
 
8.2 Survival of Covenants and Agreements.

Except as expressly provided in this Agreement, all covenants and agreements
made hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall not terminate but shall survive the Closing.
 
8.3 Indemnification by Securities Holders.

Effective upon the Closing, the Securities Holders, without any right of
recourse against CMHC or the Surviving Corporation for contribution, offset or
otherwise or as a defense thereto, shall indemnify and hold harmless Netsmart,
Surviving Corporation, their Affiliates, their respective officers, directors
and principal shareholders and their respective successors and assigns (the
“Netsmart Indemnified Parties”) from and against any claims, Liabilities,
losses, damages or expenses (any one such item being herein called a “Loss” and
all such items being herein collectively called “Losses”) which are caused by or
arise out of:

 
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(a) any breach or default in the performance by CMHC of any covenant or
agreement of CMHC to be performed by CMHC prior to the Closing contained herein
or in any certificate delivered pursuant hereto at the Closing;

(b) any breach of warranty or representation made by CMHC contained in Article
III of this Agreement or in any certificate delivered pursuant hereto at the
Closing, except for any breach of the representation contained in Section 3.34
(“Net Working Capital”);

(c) without regard to the Basket (as hereinafter defined), which shall not
apply, but after deduction of that portion of the Net Working Capital Adjustment
Fund paid to Netsmart by the Escrow Agent in respect of the Reduction Amount,
any breach of the representation contained in Section 3.34 (“Net Working
Capital”);

(d) without regard to the Basket, which shall not apply, any Shareholder
Expenses not paid by the Securities Holders in accordance with Section 5.3(e);

(e) without regard to the Basket, which shall not apply, any of the Stock Option
Purchase Agreements, any of the Warrant Purchase Agreements or the transactions
contemplated thereby or related thereto;

(f) any and all Actions, Orders, costs and expenses (including reasonable
attorneys fees, accountant fees and consultants fees) incident to the foregoing;

(g) without regard to the Basket, which shall not apply, the matter described in
Schedule 3.13, Item 1(b), to the extent not paid or accrued by CMHC on or prior
to the Effective Time; and

(h) without regard to the Basket, which shall not apply, the matter described in
Schedule 3.9, Item 4, to the extent not paid or accrued by CMHC on or prior to
the Effective Time.

Such indemnification shall be made by Indemnified Party’s recourse to, and
payment from, the Securities Holders’ Indemnity Fund held pursuant to the Escrow
Agreement, in accordance with the terms thereof.
 
8.4 Indemnification by Netsmart.

Effective upon the Closing, Netsmart agrees to indemnify and hold harmless the
Securities Holders, their respective Affiliates, their respective officers,
directors and principal shareholders and their respective successors and assigns
from and against any Losses which are caused by or arise out of:

 
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(a) any breach or default in the performance by Netsmart, Acquisition or the
Surviving Corporation of any covenant or agreement of Netsmart or Acquisition
contained herein or in any certificate delivered pursuant hereto or thereto or
at the Closing; and

(b) any breach of warranty or representation made by Netsmart or Acquisition
contained in Article IV of this Agreement or in any certificate delivered
pursuant hereto at the Closing.

(c) any and all Actions, Orders, costs and expenses (including, reasonable
attorney’s fees, accountants’ fees, and consultants’ fees) incident to the
foregoing.
 
8.5 Procedure - Third-Party Claims.

(a) Promptly after receipt by an Indemnified Party of notice of the commencement
of any Action against it by any Person who is not (i) a party to this Agreement,
(ii) a Security Holder (in such capacity), or (iii) an Affiliate of any such
Person described in clause (i) or (ii), for which an Indemnifying Party is
obligated to provide indemnification under this Agreement, such Indemnified
Party will, if a claim is to be made against an Indemnifying Party, give written
notice to the Indemnifying Party of the commencement of such Action, together
with a copy of the claim, process or other legal pleading, but the failure to
notify the Indemnifying Party will not relieve the Indemnifying Party of any
liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Party demonstrates that the defense of such action is
prejudiced by the Indemnifying Party’s failure to give such notice.

(b) If any Action referred to in Section 8.5(a) is brought against an
Indemnified Party and it gives notice to the Indemnifying Party of the
commencement of such Action, the Indemnifying Party will be entitled to
participate in such Action and, to the extent that it wishes (unless (i) the
Indemnifying Party is also a party to such Action and the Indemnified Party
reasonably determines in good faith that joint representation would be
inappropriate or (ii) the Indemnifying Party fails to provide reasonable
assurance to the Indemnified Party of its financial capacity to defend such
proceeding and provide indemnification with respect to such proceeding), to
assume the defense of such Action with counsel reasonably satisfactory to the
Indemnified Party and, after notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such Action, the
Indemnifying Party will not, so long as it diligently conducts such defense, be
liable to the Indemnified Party under this Article VIII for any fees of other
counsel or any other expenses with respect to the defense of such Action, in
each case subsequently incurred by the Indemnified Party in connection with the
defense of such Action. If the Indemnifying Party assumes the defense of the
Action, the Indemnified Party will cooperate in good faith with the Indemnifying
Party in such defense and will have the right to participate in the defense of
such Action assisted by counsel of its own choosing and at its own expense. If
the Indemnifying Party assumes the defense of an Action, (i) no compromise or
settlement of such claims may be effected by the Indemnifying Party without the
Indemnified Party’s consent (which consent will not be unreasonably withheld,
conditioned or delayed) unless (A) there is no finding or admission of any
violation of law or any violation of the rights of any Person and no effect on
any other claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Party; and (ii) the Indemnified Party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent if such consent is required by this sentence. If notice is given to an
Indemnifying Party of the commencement of any Action and the Indemnifying Party
does not, within thirty (30) days after the Indemnified Party’s notice is given,
give notice to the Indemnified Party of its election to assume the defense of
such Action, the Indemnifying Party will be bound by any determination made in
such Action or any compromise or settlement effected by the Indemnified Party to
which the Indemnifying Party consents, which consent by the Indemnifying Party
may not be unreasonably withheld, conditioned or delayed.

 
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(c) Notwithstanding the foregoing, if an Indemnified Party determines in good
faith that there is a reasonable probability that an Action for which an
Indemnifying Party is obligated to provide indemnification under this Agreement
is reasonably likely to have a Material Adverse Effect upon it or its Affiliates
other than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Party may, by notice to
the Indemnifying Party, assume the exclusive right to defend, compromise, or
settle such Action, but the Indemnifying Party, although still liable for the
payment of all reasonable legal fees, costs and expenses incurred in connection
therewith, will not be bound by any determination of an Action so defended or
any compromise or settlement effected without its consent (which may not be
unreasonably delayed, conditioned or withheld). Netsmart and the Securities
Holders’ Representative agree to act reasonably and in good faith in determining
whether to settle, compromise, defend and/or appeal any claim.
 
8.6 Procedure - Other Claims.

A claim for indemnification for any matter not involving a third-party claims
described in Section 8.5 may be asserted by written notice to the party from
whom indemnification is sought setting forth, in reasonable detail, the amount
and basis for the claim.
 
8.7 Remedies.

Effective upon the Closing, except as otherwise specifically provided in this
Agreement and the Escrow Agreement or in the case of fraud, the sole and
exclusive remedy of Netsmart, Acquisition, Surviving Corporation, and the
Securities Holders hereunder shall be restricted to the indemnification rights
set forth in this Article VIII.
 
8.8 Certain Limitations.

Notwithstanding any other provision in this Agreement to the contrary, the
liability of the Securities Holders or Netsmart, as the case may be, for claims
under this Agreement shall be limited by the following:

 
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(a) Except as set forth in Section 8.3(c), no claim or claims shall be asserted
pursuant to the provisions of Section 8.3 unless and until the aggregate amount
of such Indemnified Party’s Losses exceeds $100,000 (the “Basket”). Subject to
the other limitations contained herein (including, without limitation, those
contained in Sections 8.8(b) and 8.8(c)), once the Basket is exceeded, the
Indemnified Party shall be entitled to recover the amount of its Losses, only to
the extent that such Losses exceed, and only in amounts that exceed, the Basket.
For purposes of this limitation, the parties agree that, in applying the Basket
to the Securities Holders, the Losses of the Securities Holders shall be
cumulated (i.e., the Basket does not apply to each Security Holder on an
individual basis).

(b) The aggregate amount of Losses recoverable pursuant to the provisions of
Article VIII by the Netsmart Indemnified Parties, and the Securities Holders’
liability for Losses in respect of the Securities Holders’ Indemnity
Obligations, shall be limited solely and exclusively to the Securities Holders’
Indemnity Fund.

(c) The aggregate amount of Losses recoverable pursuant to the provisions of
Article VIII by the Securities Holders shall be limited to $2,100,000.

(d) No individual claim of a Netsmart Indemnified Party for indemnification
(other than any such claim under Section 8.11) shall be valid and assertable
unless it is for Losses in an amount in excess of $3,000 (the “Claim Threshold”)
in which event, subject to the provisions of Section 8.8(a), such claim shall be
paid in full, provided, however, that to the extent that individual claims are
related to one another, they may be aggregated for purposes of meeting the Claim
Threshold. Any individual claims that do not exceed the Claim Threshold
nevertheless shall constitute Losses for the purpose of calculating whether a
party’s Losses exceed the Basket.
 
8.9 Calculation of Damages.

(a) For purposes of this Article VIII, “Losses” suffered in respect of any
particular claim shall be calculated after making appropriate adjustments for
(i) net insurance proceeds actually received by the parties (after taking into
consideration the costs incurred to collect such proceeds and the applicable
portion of the premiums paid for the policy under which such is recovery is
had), and (ii) any payments received from third parties in respect of such claim
less the costs incurred to collect such amounts.

(b) Except as and to the extent that the same are components of a third party
claim for which an Indemnified Party is seeking indemnification hereunder, in
the absence of actual fraud or willful misconduct, no Indemnified Party shall be
entitled to recover from any Indemnifying Party hereunder special, indirect,
incidental, punitive or consequential damages. The term “Losses” as used in
Article VIII is not limited to matters asserted by third parties but includes
damages incurred or sustained by an Indemnified Party in the absence of third
party claims.
 
 
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8.10 Satisfaction of Indemnification Obligations; Escrow Fund; Reimbursement
Fund.

The Escrow Amount will be deposited by Netsmart with, and will be held by, the
Escrow Agent. The Securities Holders’ Indemnity Fund together with the Net
Working Capital Adjustment Fund and the Reimbursement Fund constitute the Escrow
Fund to be governed by the terms set forth in the Escrow Agreement. Payment of
any Loss from the Securities Holders’ Indemnity Fund shall be deemed to have
been made from the Securities Holders’ Indemnity Fund on a Pro Rata Percentage
basis. Payment of any amount from the Net Working Capital Adjustment Fund shall
be deemed to have been made from the Net Working Capital Adjustment Fund on a
Pro Rata Percentage basis. The Reimbursement Fund will be deposited by Netsmart
with, and held separately by, the Escrow Agent, such deposit to constitute the
sole and exclusive fund for reimbursement of expenses incurred by the Securities
Holders’ Representative, which shall be governed by the Escrow Agreement.
Payment of any amount out of the Reimbursement Fund shall be deemed to have been
made from the Reimbursement Fund on a Pro Rata Percentage basis.

8.11 Tax Indemnification and Other Matters.

(a) Tax Indemnification. Effective upon the Closing, the Securities Holders,
without regard to the Basket, and without any right of recourse against CMHC or
the Surviving Corporation for contribution, offset or otherwise or as a defense
thereto, shall indemnify and hold harmless the Netsmart Indemnified Parties from
and against all Losses attributable to (i) all Taxes of CMHC for all taxable
periods ending on or before the Closing Date and the portion through the end of
the Closing Date for any taxable period that includes (but does not end on) the
Closing Date (the “Pre-Closing Tax Period”), (ii) all Taxes of any member of an
affiliated, consolidated, combined or unitary group of which CMHC (or any
predecessor thereof) is or was a member on or prior to the Closing Date,
including pursuant to Treasury Regulation § 1.1502-6 or any analogous or similar
state, local or foreign law or regulation, and (iii) any and all Taxes of any
period imposed on CMHC as a transferee or successor, by contract or pursuant to
any law, rule, or regulation, which Taxes relate to a taxable event or
transaction occurring before the Closing Date; provided that this Section
8.11(a) shall apply only to the extent that Losses covered by this Section
8.11(a) exceed the amount of Taxes which are included as current liabilities on
the Closing Balance Sheet.

(b) Straddle Period. In case of any taxable period that includes (but does not
end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on
or measured by income or receipts of CMHC for the Pre-Closing Tax Period shall
be determined based on an interim closing of the books as of the close of
business on the Closing Date (and for such purpose, the taxable period of any
partnership or other pass-through entity in which CMHC holds a beneficial
interest shall be deemed to terminate at such time) and the amount of other
Taxes of CMHC for a Straddle Period that relates to the Pre-Closing Tax Period
shall be deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on the Closing Date and the denominator of which is the
number of days in such Straddle Period. The parties hereto will, to the extent
permitted by applicable law, elect with the relevant Governmental Authority to
treat a portion of any Straddle Period as a short taxable period ending as of
the close of business on the Closing Date.

 
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(c) Responsibility for Filing Tax Returns. Netsmart shall cause CMHC to prepare
and file all Tax Returns for CMHC that are filed after the Closing Date, and
shall cause CMHC to pay any Taxes due in respect of such Tax Returns, subject to
the provisions of Section 8.11. Any such Tax Return that relates to a
Pre-Closing Tax Period shall be prepared in a manner consistent with Past
Practice. Netsmart shall deliver any such Tax Return relating to a Pre-Closing
Tax Period to the Securities Holders’ Representative for its review at least
thirty (30) days prior to the date on which such Tax Return is required to be
filed. If the Securities Holders’ Representative disputes any item on such Tax
Return, it shall notify Netsmart of such disputed item (or items) and the basis
for its objection. The parties shall act in good faith to resolve any such
dispute prior to the date on which the relevant Tax Return is required to be
filed. If the parties cannot resolve any disputed item, the item in question
shall be resolved by the Accounting Firm. The fees and expenses of the
Accounting Firm relating to the resolution of the dispute shall be borne equally
by the Securities Holders and Netsmart.

(d)  Neither Netsmart nor any of its Affiliates shall (or shall cause or permit
CMHC to) amend, refile or otherwise modify any Tax Return relating in whole or
in part to CMHC with respect to any Pre-Closing Tax Period without the written
consent of the Securities Holders’ Representative, which consent may be withheld
in the sole discretion of the Securities Holders’ Representative; provided that,
in the event that such amendment, refiling or modification, or the failure to
file such amendment, refiling or modification, is likely to result in an
indemnification obligation under Section 8.11 in an amount in excess of the
amount remaining in the Securities Holders’ Indemnity Fund at such time, then
the consent of the Securities Holders’ Representative may not be unreasonably
withheld.

(e) Cooperation on Tax Matters. From and after the Effective Time:

(i) Securities Holders, acting through the Securities Holders’ Representative,
and Netsmart shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns pursuant to
Section 8.11(c) and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party’s
request) the provision of records and information that are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Netsmart and Securities Holders agree (A) to
retain all books and records within their respective control with respect to Tax
matters pertaining to CMHC relating to any taxable period beginning before the
Effective Time until the expiration of the statute of limitations (and, to the
extent notified by Netsmart or Securities Holders, any extensions thereof) of
the respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Netsmart or
Securities Holders, as the case may be, shall allow the other party to take
possession of such books and records.

 
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(ii) Netsmart and Securities Holders further agree, upon request, to use their
best efforts to obtain any certificate or other document from any Governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).

(iii) Netsmart and Securities Holders further agree, upon request, to provide
the other party with all information that either party may be required to report
pursuant to Code § 6043 and all Treasury Regulations promulgated thereunder.

(f) Tax-Sharing Agreements. All tax-sharing agreements or similar agreements
with respect to or involving CMHC shall be terminated as of the Effective Time
and, after the Effective Time, CMHC shall not be bound thereby or have any
liability thereunder.

(g) Certain Taxes and Fees. The CMHC Securities Holders, on the one hand, and
Netsmart, on the other hand, shall be responsible for and shall pay one-half of
all transfer, documentary, sales, use, stamp, registration and other such Taxes,
and all conveyance fees, recording charges, and other fees and charges
(including any penalties and interest) incurred in connection with consummation
of the transactions contemplated by this Agreement, if any. Each of the parties
hereto will, at his, her or its own expense, file all necessary Tax Returns and
other documentation with respect to all such Taxes, fees and charges, and, if
required by Applicable Law, Acquisition will join in the execution of such Tax
Returns and other documentation.

8.12 Knowledge.

It shall not be a defense, nor shall Netsmart or the Securities Holders, as the
case may be, be deemed to have waived or released or otherwise be estopped from
asserting any claim for indemnification for breach of a representation,
warranty, covenant, agreement, or condition by having consummated the Closing
despite actual or constructive knowledge of such breach prior to Closing.

ARTICLE IX
SECURITIES HOLDERS’ REPRESENTATIVE
 
9.1 Appointment.

In the event that the Shareholders approve the Merger and the Merger is
consummated, then (a) by virtue of the approval of the Merger by the
Shareholders and/or any consent or power of appointment executed by a
Shareholder, each Shareholder, other than the holder of Dissenting Shares, (b)
by virtue of the terms of the Option Cancellation Agreement, each holder of a
CMHC Stock Option who executed and delivered an Option Cancellation Agreement in
respect of such option, and (c) by virtue of the terms of the Warrant Exchange
Agreement, each holder of a CMHC Stock Warrant who executed and delivered a
Warrant Exchange Agreement in respect of such warrant, shall, from and after the
Closing Date and without any further action by such Securities Holders,
irrevocably appoint John Paton (the “Securities Holders’ Representative”) to act
as the true and lawful agent of such Securities Holders and attorney-in-fact
with respect to all matters arising in connection with this Agreement, the
Escrow Agreement and the Registration Rights Agreement. For purposes of this
Article IX, the context in which the term “Securities Holders” is used shall
refer only to the Securities Holders described in 9.1(a),(b) and (c).
 
 
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9.2 Powers and Authority.

From and after the Closing Date, the Securities Holders’ Representative shall
have full power and authority to represent all of the Securities Holders and
their successors with respect to all matters arising under this Agreement, the
Escrow Agreement and the Registration Rights Agreement and all actions taken by
the Securities Holders’ Representative hereunder and thereunder shall be binding
upon all such Securities Holders and their successors as if expressly confirmed
and ratified in writing by each of them and no Securities Holder shall have the
right to object, dissent, protest or otherwise contest the same. The Securities
Holders’ Representative shall take any and all actions which he believes are
necessary or appropriate under this Agreement, the Escrow Agreement and
Registration Rights Agreement for and on behalf of the Securities Holders, as
fully as if the Securities Holders were acting on their own behalf, including,
without limitation, executing the Escrow Agreement as Securities Holders’
Representative, executing the Registration Rights Agreement as Securities
Holders’ Representative, giving and receiving any notice or instruction
permitted or required under this Agreement, the Escrow Agreement or the
Registration Rights Agreement by the Securities Holders’ Representative or any
Securities Holder, interpreting all of the terms and provisions of this
Agreement, the Escrow Agreement or the Registration Rights Agreement,
authorizing payments to be made with respect hereto or thereto, obtaining
reimbursement as provided for herein for all out-of-pocket fees and expenses and
other obligations of or incurred by the Securities Holders’ Representative in
connection with this Agreement, the Escrow Agreement or the Registration Rights
Agreement, defending all Claims against the Securities Holders pursuant to
Article VIII hereof, the Escrow Agreement and the Registration Rights Agreement,
consenting to, compromising or settling all claims, conducting negotiations with
Netsmart and its agents regarding such claims, dealing with Netsmart and the
Escrow Agent under this Agreement, the Escrow Agreement, and the Registration
Rights Agreement with respect to all matters arising under this Agreement, the
Escrow Agreement and the Registration Rights Agreement, taking any and all other
actions specified in or contemplated by this Agreement, the Escrow Agreement and
the Registration Rights Agreement and engaging counsel, accountants or other
Representatives of the Securities Holders’ Representative in connection with the
foregoing matters. Without limiting the generality of the foregoing, the
Securities Holders’ Representative shall have full power and authority to
interpret all the terms and provisions of this Agreement, the Escrow Agreement
and the Registration Rights Agreement and to consent to any amendment hereof or
thereof on behalf of all such Securities Holders and such successors.
Notwithstanding the foregoing, each Securities Holder shall have the right to
exercise any voting rights appertaining to the Escrow Amount.
 
9.3 Authorization.

Without limiting the generality of the foregoing, the Securities Holders’
Representative has been appointed as the Securities Holders’ Representative to
act as the true and lawful agent of the Securities Holders and attorney-in-fact
with respect to all matters arising in connection with this Agreement, the
Escrow Agreement and the Registration Rights Agreement, including but not
limited to the power and authority on behalf of each Securities Holder (other
than in his or her own right) to do any one or all of the following:

 
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(a) Receive all notices or documents given or to be given to any of the
Securities Holders by Netsmart pursuant this Agreement, the Escrow Agreement or
the Registration Rights Agreement or in connection herewith or therewith and to
receive and accept service of legal process in connection with any suit or
proceeding arising under this Agreement, r the Escrow Agreement or the
Registration Rights Agreement;

(b) Deliver to Netsmart at the Closing all certificates and documents to be
delivered to Netsmart by any of the Securities Holders pursuant to this
Agreement, together with any other certificates and documents executed by any of
the Securities Holders and deposited with the Securities Holders’ Representative
for such purpose;

(c) Engage counsel and such accountants and other advisors for any of the
Securities Holders and incur such other expenses on behalf of any of the
Securities Holders in connection with this Agreement, the Escrow Agreement or
the Registration Rights Agreement and the transactions contemplated hereby or
thereby as the Securities Holders’ Representative may in his sole discretion
deem appropriate; and

(d) Take such action on behalf of any of the Securities Holders as the
Securities Holders’ Representative may in his sole discretion deem appropriate
in respect of:

(i) waiving any inaccuracies in the representations or warranties of Netsmart
contained in this Agreement or in any document delivered by Netsmart pursuant
hereto;

(ii) waiving the fulfillment of any of the conditions precedent to obligations
under the Escrow Agreement or the Registration Rights Agreement;

(iii) taking such other action as the Securities Holders’ Representative or any
of the Securities Holders is authorized to take under this Agreement, the Escrow
Agreement or the Registration Rights Agreement;

(iv) receiving all documents or certificates and making all determinations, on
behalf of any of the Securities Holders, required under this Agreement, the
Escrow Agreement or the Registration Rights Agreement;

(v) all such other matters as the Securities Holders’ Representative may in his
sole discretion deem necessary or appropriate to consummate this Agreement, the
Escrow Agreement or the Registration Rights Agreement and the transactions
contemplated hereby and thereby; and

(vi) all such action as may be necessary after the Closing Date to carry out any
of the transactions contemplated by this Agreement, including, without
limitation, the defense and/or settlement of any claims for which
indemnification is sought pursuant to Article VIII of this Agreement and any
waiver of any obligation of Netsmart or the Surviving Corporation.

 
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All actions, decisions and instructions of the Securities Holders’
Representative shall be conclusive and binding upon all of the Securities
Holders and no Securities Holder nor any other Person shall have any claim or
cause of action against the Securities Holders’ Representative, and the
Securities Holders’ Representative shall have no liability to any Securities
Holder or any other Person, for any action taken, decision made or instruction
given by the Securities Holders’ Representative in connection with this
Agreement, the Escrow Agreement or the Registration Rights Agreement, except in
the case of his own gross negligence or willful misconduct.
 
9.4 Indemnification of Securities Holders’ Representative.

The Securities Holders’ Representative shall incur no liability to the
Securities Holders or the Escrow Agent or any other Person with respect to any
action taken or suffered by him in reliance upon any note, direction,
instruction, consent, statement or other documents reasonably believed by the
Securities Holders’ Representative to be genuinely and duly authorized by at
least a Majority in Interest of the Securities Holders (or the successors or
assigns thereto), nor for other action or inaction taken or omitted in good
faith in connection herewith, the Escrow Agreement or the Registration Rights
Agreement, in any case except for liability to the Securities Holders for his
own gross negligence or willful misconduct. The Securities Holders’
Representative shall be indemnified by the Securities Holders for and shall be
held harmless against any loss, liability or expense incurred without gross
negligence or willful misconduct on the part of the Securities Holders’
Representative arising out of or in connection with its performance under this
Agreement, the Escrow Agreement and the Registration Rights Agreement. This
indemnification shall survive the termination of this Agreement. For all
purposes hereunder, a “Majority in Interest” of the Securities Holders shall be
determined on the basis of each Securities Holder’s ownership of CMHC Common
Stock immediately prior to the Effective Time (assuming the exercise or
conversion of all options and warrants outstanding immediately prior to the
Effective Time). The Securities Holders’ Representative may, in all questions
arising under this Agreement, the Escrow Agreement or the Registration Rights
Agreement rely on the advice of counsel and for anything done, omitted or
suffered in good faith by the Securities Holders’ Representative in accordance
with such advice, the Securities Holders’ Representative shall not be liable to
the Securities Holders or the Escrow Agent or any other Person. In no event
shall the Securities Holders’ Representative be liable hereunder or in
connection herewith for (i) any indirect, punitive, special or consequential
damages, or (ii) any amounts other than those that are satisfied out of the
Reimbursement Fund.
 
9.5 Access to Information.

The Securities Holders’ Representative shall have reasonable access to
information of and concerning any claim and which is in the possession, custody
or control of Netsmart and the reasonable assistance of Netsmart’s officers and
employees for purposes of performing the Securities Holders’ Representative’s
duties under this Agreement, the Escrow Agreement and the Registration Rights
Agreement and exercising his rights under this Agreement, the Escrow Agreement
and the Registration Rights Agreement; provided that the Securities Holders’
Representative shall treat confidentially and not disclose any nonpublic
information from or concerning any claim to anyone (except to the Securities
Holders’ Representative’s attorneys, accountants and other advisers, to
Securities Holders, to any mediators or arbitrators appointed to resolve
disputes pursuant to this Agreement, the Escrow Agreement and the Registration
Rights Agreement, to or in connection with any litigation relating to a dispute
pursuant to this Agreement, the Escrow Agreement and the Registration Rights
Agreement, and on a need-to-know basis to other individuals who agree to keep
such information confidential).
 
 
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9.6 Reasonable Reliance.

In the performance of his duties hereunder, the Securities Holders’
Representative shall be entitled to rely upon any document or instrument
reasonably believed by him to be genuine, accurate as to content and signed by
any Securities Holder or Netsmart. The Securities Holders’ Representative may
assume that any person purporting to give any notice in accordance with the
provisions hereof has been duly authorized to do so.
 
9.7 Attorney-in-Fact.

(a) The Securities Holders’ Representative is hereby appointed and constituted
the true and lawful attorney-in-fact of each Securities Holder, with full power
in his, her or its name and on his, her or its behalf to act according to the
terms of this Agreement, the Escrow Agreement and the Registration Rights
Agreement in the absolute discretion of the Securities Holders’ Representative;
and in general to do all things and to perform all acts including, without
limitation, executing and delivering this Agreement, the Escrow Agreement, the
Registration Rights Agreement and any other agreements, certificates, receipts,
instructions, notices or instruments contemplated by or deemed advisable in
connection with this Agreement, the Escrow Agreement and the Registration Rights
Agreement.

(b) This power of attorney and all authority hereby conferred is granted and
shall be irrevocable and shall not be terminated by any act of any Securities
Holder, by operation of law, whether by such Securities Holder’s death,
disability protective supervision or any other event. Without limitation to the
foregoing, this power of attorney is to ensure the performance of a special
obligation and, accordingly, each Securities Holder hereby renounces its, his or
her right to renounce this power of attorney unilaterally any time before the
end of the Escrow Period (as defined in the Escrow Agreement).

(c) Each Securities Holder hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the Securities Holders’
Representative taken in good faith under this Agreement.

(d) Notwithstanding the power of attorney granted in this Article IX, no
agreement, instrument, acknowledgement or other act or document shall be
ineffective by reason only of the Securities Holders having signed or given such
directly instead of the Securities Holders’ Representative.
 
9.8 Liability.

If the Securities Holders’ Representative is required by the terms of this
Agreement, the Escrow Agreement or the Registration Rights Agreement to
determine the occurrence of any event or contingency, the Securities Holders’
Representative shall, in making such determination, be liable to the Securities
Holders only for his proven gross negligence or willful misconduct as determined
in light of all the circumstances, including the time and facilities available
to him in the ordinary conduct of business. In determining the occurrence of any
such event or contingency, the Securities Holders’ Representative may request
from any of the Securities Holders or any other person such reasonable
additional evidence as the Securities Holders’ Representative in his sole
discretion may deem necessary to determine any fact relating to the occurrence
of such event or contingency, and may at any time inquire of and consult with
others, including any of the Securities Holders, and the Securities Holders’
Representative shall not be liable to any Securities Holder for any damages
resulting from his delay in acting hereunder pending his receipt and examination
of additional evidence requested by him.
 
 
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9.9 Orders.

The Securities Holders’ Representative is authorized, in his sole discretion, to
comply with final, nonappealable orders or decisions issued or process entered
by any court of competent jurisdiction or arbitrator with respect to the Escrow
Fund. If any portion of the Escrow Fund is disbursed to the Securities Holders’
Representative and is at any time attached, garnished or levied upon under any
court order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any court order, or
in case any order, judgment or decree shall be made or entered by any court or
arbitration affecting such property or any part thereof, then and in any such
event, the Securities Holders’ Representative is authorized, in his sole
discretion, but in good faith, to rely upon and comply with any such order,
writ, judgment or decree which he is advised by legal counsel selected by him is
binding upon him without the need for appeal or other action; and if the
Securities Holders’ Representative complies with any such order, writ, judgment
or decree, he shall not be liable to any Securities Holder or to any other
Person by reason of such compliance even though such order, writ, judgment or
decree may be subsequently reversed, modified, annulled, set aside or vacated.
 
9.10 Removal or Resignation of Securities Holders’ Representative; Authority of
Successor Securities Holders’ Representative.

(a) Securities Holders who in the aggregate hold at least a Majority in Interest
in the Escrow Fund shall have the right at any time during the term of the
Escrow Agreement to remove the then-acting Securities Holders’ Representative
and to appoint a successor Securities Holders’ Representative; provided,
however, that neither such removal of the then acting Securities Holders’
Representative nor such appointment of a successor Securities Holders’
Representative shall be effective until the delivery to the Escrow Agent of
executed counterparts of a writing signed by each such Securities Holder with
respect to such removal and appointment, together with an acknowledgment signed
by the successor Securities Holders’ Representative appointed in such writing
that he or she accepts the responsibility of successor Securities Holders’
Representative and agrees to perform and be bound by all of the provisions of
this Agreement applicable to the Securities Holders’ Representative. The removed
Securities Holders’ Representative shall thereafter be discharged from any
further duties and liability under this Agreement. The Escrow Agent shall give
notice to the Securities Holders promptly after such appointment describing the
identity of the successor Securities Holders’ Representative.

 
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(b) The Securities Holders’ Representative may resign at any time upon giving at
least thirty (30) days written notice to the other parties hereto and to the
Securities Holders; provided, however, that no such resignation shall become
effective until the appointment of a successor Securities Holders’
Representative in accordance with this Section. Securities Holders who in the
aggregate hold at least a Majority in Interest in the Escrow Fund shall appoint
a successor Securities Holders’ Representative and shall use their commercially
reasonable efforts to make such appointment within thirty (30) days after
receiving such notice. Such appointment of a successor Securities Holders’
Representative shall not be effective until the delivery to the Escrow Agent of
executed counterparts of a writing signed by each such Securities Holder with
respect to such removal and appointment, together with an acknowledgment signed
by the successor Securities Holders’ Representative appointed in such writing
that he or she accepts the responsibility of successor Securities Holders’
Representative and agrees to perform and be bound by all of the provisions of
this Agreement applicable to the Securities Holders’ Representative. The
resigned Securities Holders’ Representative shall thereafter be discharged from
any further duties and liability under this Agreement. The Escrow Agent shall
give notice to the Securities Holders promptly after such appointment describing
the identity of the successor Securities Holders’ Representative.

(c) Each successor Securities Holders’ Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Securities Holders’ Representative, and the term “Securities Holders’
Representative” as used herein and in the Escrow Agreement shall be deemed to
include any interim or successor Securities Holders’ Representative.
 
9.11 Expenses of Securities Holders’ Representative.

The Securities Holders’ Representative shall be entitled to recover from the
Reimbursement Fund for out-of-pocket fees and expenses (including legal,
accounting and other advisors’ fees and expenses, if applicable) incurred by the
Securities Holders’ Representative in performing under this Agreement, the
Escrow Agreement and the Registration Rights Agreement. In connection therewith,
the Securities Holders’ Representative shall be entitled to withdraw cash
amounts held in the Reimbursement Fund as reimbursement for such fees and
expenses as provided herein and in the Escrow Agreement. The Securities Holders
(i) shall have no claim or cause of action against, may not assert any claim
against, and shall indemnify and hold harmless the Securities Holders’
Representative and each of its Affiliates and any of their respective partners,
directors, officers, employees, agents, shareholders, consultants, attorneys,
accountants, advisors, brokers, representatives or controlling persons; and (ii)
shall pay promptly upon request to the Securities Holders’ Representative, upon
the exhaustion of the Reimbursement Fund promptly upon request, such Securities
Holder’s pro rata share of any amounts paid by the Securities Holders’
Representative on behalf of the Securities Holders and all costs and expenses
(including legal, accounting and other advisors’ fees and expenses, if
applicable) incurred by the Securities Holders’ Representative in connection
with the protection, defense or enforcement of any rights under this Agreement,
the Escrow Agreement or the Registration Rights Agreement. Under no
circumstances shall the Securities Holders’ Representative be entitled to
recover any out-of-pocket expenses or fees from the Securities Holders’
Indemnity Fund or the Net Working Capital Adjustment Fund unless and until,
pursuant to the terms of the Escrow Agreement, the whole or any portion of such
funds are to be paid to the Securities Holders. Accordingly, in connection with
clause (ii) above, the Securities Holders’ Representative shall be entitled to
recover from any distribution, when it is to be made to the Securities Holders
from the Escrow Fund, from time to time, the amount of any such unpaid fees and
expenses.
 
 
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9.12 Irrevocable Appointment.

The appointment of the Securities Holders’ Representative hereunder is
irrevocable and any action taken by the Securities Holders’ Representative
pursuant to the authority granted in this Article IX shall be effective and
absolutely binding on each Securities Holder thereof notwithstanding any
contrary action of, or direction from, any Securities Holder, except for actions
taken by the Securities Holders’ Representative which are in bad faith.
 
9.13 Netsmart’s Reliance.

Netsmart shall be entitled to rely on any and all action taken by the Securities
Holders’ Representative, without any liability to, or obligation to inquire of,
any Securities Holder, even if Netsmart or such party had Knowledge of any
actual or potential dispute among the Securities Holders. Netsmart shall not be
obliged to inquire into the authority of the Securities Holders’ Representative
or the genuineness of his signature on any writing, and Netsmart otherwise shall
be fully protected in dealing with the Securities Holders’ Representative in all
respects.
 
9.14 Binding Appointment.

The provisions of this Agreement, including without limitation Article IX
hereof, shall be binding upon each Securities Holder and the executors, heirs,
legal representatives and successors of each Securities Holder, and any
references in this Agreement to a Securities Holder or the Securities Holders
shall mean and include the successors to the Securities Holders’ rights
hereunder, whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
 
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
 
10.1 Termination. 

This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the Merger by the Shareholders of CMHC:

(a) by mutual written consent duly authorized by the Boards of Directors of
Netsmart and CMHC;

(b) by either CMHC or Netsmart if the Merger shall not have been consummated by
October 17, 2005 (“Termination Date”); provided, however, that the right to
terminate this Agreement under this Section 10.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;

 
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(c) by either CMHC or Netsmart if a Governmental Authority shall have issued an
Order having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which Order is final and nonappealable;

(d) by Netsmart, if by reason of either (i) a breach of any representation,
warranty or covenant made by CMHC in this Agreement, which breach is not curable
or, if curable, has not been cured within thirty (30) days following receipt by
CMHC of notice from Netsmart of such breach or (ii) the occurrence or
non-occurrence of any other event, condition or circumstance, there shall have
been a Material Adverse Effect regarding CMHC since the date of this Agreement;

(e) by CMHC if by reason of either (i) a breach of any representation, warranty
or covenant made by Netsmart in this Agreement, which breach is not curable or,
if curable, has not been cured within thirty (30) days following receipt by
Netsmart of notice from CMHC of such breach or (ii) the occurrence or
non-occurrence of any other event, condition or circumstance, there shall have
been a Material Adverse Effect regarding Netsmart or Acquisition since the date
of this Agreement; or

(f) by CMHC pursuant to an authorized Change in CMHC Recommendation effected in
accordance with, and as provided by, Section 5.1(d).
 
10.2 Notice of Termination; Effect of Termination.

Any termination of this Agreement under Section 10.1 above will be effective
immediately upon the delivery of written notice of the terminating party to the
other parties hereto. In the event of the termination of this Agreement as
provided in Section 10.1, this Agreement shall be of no further force or effect,
and there will be no liability or obligation on the part of either CMHC or
Netsmart (or any of their respective Representatives or Affiliates), except (i)
as set forth in Section 5.1(d), Section 5.3(b), this Section 10.2 and Article
XI, each of which shall survive the termination of this Agreement, and (ii)
nothing herein shall relieve any party from liability for any willful breach of
this Agreement. In addition, the Confidentiality Agreement shall not be affected
by the termination of this Agreement.
 
ARTICLE XI
MISCELLANEOUS
 
11.1 Governing Law; Jurisdiction and Venue.

Other than the validity of the Merger which shall be governed by the laws of the
State of Ohio, this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof. For
all actions and proceedings, the parties hereby irrevocably and unconditionally
(i) consent to the personal jurisdiction of the United States District Court for
the Eastern District of New York located in Central Islip, New York, and to the
designation of such action as a “Long Island Action,” or if subject matter
jurisdiction is lacking in such Court, to the jurisdiction of the Supreme Court
of the State of New York for the County of Nassau; (ii) agree not to commence
any action, suit or proceeding arising out of or relating to this Agreement
except in such courts, (iii) agree that service of any process, summons, notice
or document sent by U.S. certified mail, return receipt requested, or by
nationally recognized overnight courier service to either Netsmart or to the
Shareholders’ Representative on behalf of any one or more of the Shareholders,
at their respective addresses herein provided, shall be legally effective and
sufficient for all purposes; and (iv) waive any defense or objection to
proceeding in such court, including those objections and defenses based on an
alleged lack of personal jurisdiction, improper venue and forum non-conveniens.

 
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11.2 Waiver of Jury Trial.

In the event that any dispute shall arise between Netsmart or Acquisition, on
the one hand, and CMHC or the Securities Holders, on the other hand, and
litigation ensues, WITH RESPECT TO ANY LITIGATION ARISING OUT OF THIS AGREEMENT
OR ANY RELATED TRANSACTION, THE PARTIES EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE
TO A JURY TRIAL AND AGREE THAT ANY SUCH LITIGATION SHALL BE TRIED BY A JUDGE
WITHOUT A JURY.
 
11.3 Severability.

If any provision of this Agreement shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable as applied in any particular case because
it conflicts with any other provision or provisions hereof or any constitution
or statute or rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatever. The invalidity of any one or more phrases, sentences,
clauses, sections, or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
 
11.4 Notices.

All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally or sent
by certified mail (return receipt requested), postage prepaid, recognized
national or international air courier or by facsimile transmission
electronically confirmed:

if to Netsmart or Acquisition:

Netsmart Technologies, Inc.
3500 Sunrise Highway
Great River, New York 11739
Fax: (516) 968-2123
Attn.: James Conway, CEO
 
 
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with a copy to:
 
Kramer, Coleman, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Fax: (516) 822-4824
Attn.: Nancy D. Lieberman, Esq. and Edward S. Wactlar, Esq.

if to CMHC:
 
CMHC Systems, Inc.
570 Metro Place North
Dublin, Ohio 43017
Fax: (614) 764-1208
Attn: John Paton, Chairman
 
with a copy to:
 
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Fax (614) 464-6350
Attn: Anker M. Bell, Esq.

if to the Securities Holders’ Representative:
 
John Paton
6761 Cook Road
Powell, Ohio 43065

with a copy to:
 
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Fax: (614) 464-6350
Attn: Anker M. Bell, Esq.

or, in each case, at such other address or facsimile as may be specified in
writing to the other parties.
 
11.5 Waiver.

Any party may waive compliance by another party with any of the provisions of
this Agreement. No waiver of any provisions shall be construed as a waiver of
any other provision or a future waiver of any provision hereof. Any waiver
cannot be implied and must be in writing to be effective.
 
 
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11.6 Assignment.

No party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other parties.
 
11.7 General Construction Principles.

The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Any
information or matters contained in any Schedule annexed to this Agreement shall
not be deemed to be referable or applicable to, or incorporated in, any other
Section or Schedule unless specific reference is made thereto in such other
Section or Schedule or where such reference is inadvertently omitted from a
Schedule, such information or matter, by its very nature and substance, is
reasonably referable or applicable to such other Schedule. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. Subject to Applicable Law, this Agreement may only be
amended by an instrument in writing duly executed and delivered on behalf of
each of the parties hereto. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which shall constitute one and the same instrument.
 
11.8 Third Parties.

Except as expressly provided herein, nothing in this Agreement shall be deemed
to be for the benefit of, or enforceable by or on behalf of any party,
including, without limitation, any employee or former employee of CMHC, any
dependent or beneficiary of any such employee, any labor union or other party or
organization, any obligee, owner or holder of any obligation or liability, other
than the parties to this Agreement and the Indemnified Parties.

11.9 Enforcement Rights of Securities Holders .

From and after the Effective Time, the Securities Holders, through the
Securities Holders Representative, shall be entitled to enforce all of the
rights of CMHC hereunder and all of the representation, warranties and covenants
made by Netsmart or Acquisition under this Agreement.

11.10 Acknowledgement of Non-CMHC Assets .

The parties acknowledge and agree that Schedule 11.10 identifies certain assets
that, although currently located within the Business Premises, are not owned or
leased by CMHC. The parties acknowledge and agree that the owners of such assets
are entitled to remove such assets from the Business Premises at any time.

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

 
NETSMART TECHNOLOGIES, INC.

By: /s/James L. Conway                     
Name: James L. Conway                     
Title: CEO                                              

HAYES ACQUISITION CORP.

By: /s/James L. Conway                     
Name: James L. Conway                     
Title: President                                     

CMHC SYSTEMS, INC.

By: /s/John A. Paton                           
Name: John A. Paton                           
Title: Chairman                                      

SECURITIES HOLDERS’ REPRESENTATIVE
 
Name: /s/John A. Paton                       

 
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EXHIBITS

ExhibitA
Form of Registration Rights Agreement

Exhibit B Form of Escrow Agreement

Exhibit C Form of New Lease

 
 
 

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EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of September ___, 2005 between Netsmart Technologies, Inc., a Delaware
corporation (the “Company”), and John Paton (the “Securities Holders’
Representative”), as representative and on behalf of the securities holders of
CMHC Systems, Inc., an Ohio corporation (“CMHC”), identified on Schedule A
hereto (collectively, the “CMHC Securities Holders”).

WHEREAS, the Company, CMHC and Hayes Acquisition Corp. (“Acquisition”) are
parties to an Agreement and Plan of Merger dated as of September 20, 2005 (the
“Merger Agreement”), pursuant to which the Company is acquiring CMHC through the
merger of Acquisition (which is a wholly-owned subsidiary of the Company) with
and into CMHC, with CMHC being the surviving corporation after such merger (the
“Merger”);

WHEREAS, pursuant to the Merger Agreement, the Company will issue and deliver to
the CMHC Securities Holders, as part of the consideration to be paid under the
Merger Agreement, 435,730 shares of the Company’s common stock, par value $.01
per share (the “Shares”); and

WHEREAS, the Company has agreed to provide certain registration rights to the
CMHC Securities Holders under the Securities Act (as defined herein) with
respect to the Shares.

NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties, the
Company and the Securities Holders’ Representative hereby agree as follows:

1. Definitions.

Capitalized terms used but not otherwise defined herein shall have the meanings
given such terms in the Merger Agreement. As used in this Agreement, the
following terms shall have the following meanings:

“Acquisition” shall have the meaning set forth in the recitals to this
Agreement.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control,” when used with respect
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “affiliated,”“controlling” and “controlled” have meanings correlative to
the foregoing.

“Agreement” shall have the meaning set forth in the preamble to this Agreement.

“Blackout Period” shall have the meaning set forth in Section 3(k).

 
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“Board” shall have the meaning set forth in Section 3(k).

“Business Day” means any day except Saturday, Sunday and any day which is a
legal holiday or a day on which banking institutions in the state of New York
generally are authorized or required by law or other government actions to
close.

“CMHC” shall have the meaning set forth in the preamble to this Agreement.

“CMHC Securities Holders” shall have the meaning set forth in the preamble to
this Agreement.

“Commission” means the Securities and Exchange Commission.

“Company” shall have the meaning set forth in the preamble to this Agreement.

“Effectiveness Date” means, with respect to any Registration Statement, a date
which is within five (5) Business Days of the date on which the Commission
informs the Company that the Commission (a) will not review the Registration
Statement or (b) that the Company may request the acceleration of the
effectiveness of the Registration Statement.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

“Holder” means each beneficial holder from time to time of the Registrable
Securities including, without limitation, the CMHC Securities Holders who
receive Shares as of the Effective Time (the “Initial Holders”) and any of their
assignees permitted pursuant to Section 9(f) (each, a “Permitted Assignee”).

“Indemnified Party” shall have the meaning set forth in Section 6(c).

“Indemnifying Party” shall have the meaning set forth in Section 6(c).

“Initial Holders” shall have the meaning set forth in the definition of
“Holder.”

“Initial Registration Statement” shall have the meaning set forth in Section
2(a).

“Losses” shall have the meaning set forth in Section 6(a).

“Material Event” means any event, fact or circumstance that results in any
statement made in any Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference being untrue in
any material respect or that requires any revisions to any Registration
Statement, Prospectus or other documents so that such document will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

“Merger” shall have the meaning set forth in the recitals to this Agreement.

 
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“Merger Agreement” shall have the meaning set forth in the recitals to this
Agreement.

“Nasdaq” shall mean The Nasdaq Stock Market.

“Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.

“Questionnaire” means the questionnaire prepared by the Company and delivered by
each Holder to the Company regarding the information about such Holder as may be
required by Applicable Law (including, without limitation, the information
required by Items 507 and 508 of Regulation S-K promulgated by the Commission
under the Securities Act) to be contained in a Registration Statement covering
the sale of Registrable Securities by such Holder.

“Registrable Securities” means the Shares issued to the CMHC Securities Holders
as of the Effective Time and any other shares of the Company’s common stock
issued upon any stock split, stock dividend, recapitalization or similar event
with respect to such Shares and any other securities issued in exchange of or
replacement of such Shares until such securities (a) have been disposed of in
accordance with a Registration Statement under the Securities Act or (b) are
eligible to be sold pursuant to Rule 144(k).

“Registration Statement” means any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 
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“Securities Holders’ Representative” shall have the meaning set forth in the
preamble to this Agreement.

“Shares” shall have the meaning set forth in the recitals to this Agreement.

“Special Counsel” means legal counsel appointed by the Holders of a majority in
interest of the of the Registrable Securities to represent the Holders in
connection with the registration and sale of the Registrable Securities.

2. Registration. (a) The Company shall prepare and file with the Commission, as
soon as reasonably practicable, but in any event by the date thirty (30) days
after (i) the date of the closing of the Merger or (ii) if later, the date on
which each of the Initial Holders have delivered to the Company a completed
Questionnaire in accordance with Section 4(b)(i), a Registration Statement
registering an offering to be made on a delayed or continuous basis pursuant to
Rule 415 of the Securities Act for the resale of all of the Registrable
Securities by the Holders from time to time in accordance with the methods of
distribution elected by the Initial Holders (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance with the Securities Act). The Company shall use
its commercially reasonable efforts to cause the Initial Registration Statement
to be declared effective under the Securities Act as soon as reasonably
practicable in the existing circumstances after the filing thereof, and to keep
the Initial Registration Statement continuously effective under the Securities
Act for a period of two (2) years from the Effectiveness Date pertaining thereto
or such earlier date as all the Registrable Securities covered by the Initial
Registration Statement have been sold or are saleable without registration under
the Securities Act pursuant to Rule 144(k) or any successor provision thereto
(the “Effectiveness Period”).

(b) The Holders and the Company hereby agree that the obligation of the Company
to use commercially reasonable efforts hereunder shall not (i) require the
Company to make any initial or continuing disclosure or (ii) prevent the Company
from contesting any position taken by the Commission in any comment letter that,
in each case, it determines in good faith or is advised by counsel is not
required or may not be in the best interests of the Company or its securities
holders.

(c) From and after the date the Initial Registration Statement is declared
effective by the Commission, the Company shall, as promptly as practicable after
the date a subsequent Holder returns a completed Questionnaire to the Company,
and in any event within five (5) Business Days after such date, if required by
Applicable Law, prepare and file with the Commission a post-effective amendment
to a Registration Statement or a supplement to the related Prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that the Holder delivering such
Questionnaire is named as a selling security holder in a Registration Statement
and the related Prospectus in such a manner as to permit such Holder to deliver
such Prospectus to purchasers of the Registrable Securities in accordance with
Applicable Law; provided that if a Questionnaire is delivered to the Company
during a Blackout Period, the Company shall so inform the Holder delivering such
Questionnaire and shall take the actions set forth in this Section 2(c) upon the
expiration of the Blackout Period.

 
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3. Registration Procedures; Company’s Obligations. In connection with the
registration of the Registrable Securities, the Company shall:

(a) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective during the Effectiveness
Period; (ii) cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) subject to the provisions of Section 2(b), respond promptly to any
comments received from the Commission with respect to the Registration Statement
or any amendment thereto; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the Holders set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented.

(b) As promptly as practicable, notify the Holders and Special Counsel (i) when
any Prospectus, Prospectus supplement, Registration Statement or post-effective
amendment to a Registration Statement has been filed with the Commission and,
with respect to a Registration Statement or any post-effective amendment, when
the same has been declared effective; (ii) of any request, following the
effectiveness of a Registration Statement, by the Commission or any other
federal or state governmental authority for amendments or supplements to any
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of any
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence or existence of (but not the nature of or details
concerning) any Material Event; provided, however, that no notice by the Company
shall be required pursuant to this clause (v) in the event that the Company
promptly files a Current Report on Form 8-K or other appropriate Exchange Act
report that is incorporated by reference into any Registration Statement which
contains the requisite information with respect to such Material Event that
results in such Registration Statement no longer containing any untrue statement
of a material fact or omitting to state a material fact necessary to make the
statements contained therein not misleading; and (vi) of the determination by
the Company that a post-effective amendment to a Registration Statement should
be filed with the Commission.

(c) Use commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain as soon as reasonably practicable in the existing circumstances, the
withdrawal or rescission of, (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction. If a stop order suspending the effectiveness of a
Registration Statement has not been rescinded within thirty (30) days of its
issue date, subject to the provisions of Section 2(b), the Company shall amend
such Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file a new
Registration Statement covering all of the then outstanding Registrable
Securities.

 
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(d) If reasonably requested by a Holder, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement, such
information as the Securities Holders’ Representative or Holder shall, based on
the opinion of Special Counsel, determine to be required to be included therein
by Applicable Law and make any required filings of such Prospectus supplement or
such post-effective amendment; provided, however, that the Company shall not be
required to take any actions under this Section that are not, in the reasonable
opinion of counsel to the Company, in compliance with Applicable Law.

(e) Promptly deliver to the Holders and any Special Counsel, without charge, as
many copies of the Registration Statement, Prospectus or Prospectuses (including
each form of Prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by the Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

(f) Use commercially reasonable efforts to: (i) register or qualify or, at the
option of the Company, cooperate with the Holders and Special Counsel in
connection with the registration or qualification (or perfection of an exemption
from such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as the Holder reasonably requests in writing; (ii) keep
each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period; and (iii) do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not otherwise required to be so qualified but for
this Agreement or to take any action that would subject it to general service of
process or taxation in any such jurisdiction where it is not then so subject.

(g) Upon the occurrence of any Material Event, promptly prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other document that would
be incorporated by reference into such Registration Statement or Prospectus so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(h) Use its commercially reasonable efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on Nasdaq and any other
securities exchange, quotation system, market or over-the-counter bulletin
board, if any, on which the same securities issued by the Company are then
listed.

 
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(i) Comply in all material respects with all Applicable Laws, including
applicable rules and regulations of the Commission and Nasdaq.

(j) Enter into such customary agreements and take all such other necessary
actions in order to expedite or facilitate the disposition of the Registrable
Securities.

(k) Upon (i) any Material Event or (ii) the occurrence or existence of (x) any
material non-public information regarding the Company which the Company’s Board
of Directors (the “Board”) reasonably determines not to be in the Company’s best
interest to disclose and which the Company is not otherwise required to
disclose, or (y) a significant business opportunity (including, but not limited
to, the acquisition or disposition of assets (other than in the ordinary course
of business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board reasonably determines not
to be in the Company’s best interest to disclose and which the Company would be
required to disclose under a Registration Statement, the Company may suspend
effectiveness of a Registration Statement and suspend the sale of Registrable
Securities under a Registration Statement; provided, however, that the Company
may not suspend its obligation more three times during any twelve month period
nor for more than thirty (30) days in the aggregate in any three month period or
sixty (60) days in the aggregate in any twelve month period (each, a “Blackout
Period”); and provided, further, that no such suspension shall be permitted for
more than forty (40) consecutive days, arising out of the same set of facts,
circumstances or transactions.

4. Registration Procedures; Holder’s Obligations. In connection with the
registration of the Registrable Securities, each Holder shall:

(a) If the Registration Statement refers to the Holder by name or otherwise as
the holder of any securities of the Company, have the right to require (if such
reference to the Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force) the deletion of the reference
to the Holder in any amendment or supplement to the Registration Statement filed
or prepared subsequent to the time that such reference ceases to be required.

(b) (i) if an Initial Holder, provide a completed Questionnaire to the Company
at the closing of the Merger, (ii) upon any change in the information provided
in the initial Questionnaire, promptly furnish to the Company amended
information regarding such Holder and the distribution of such Registrable
Securities as is required by Applicable Law to be disclosed in the Registration
Statement, (iii) not sell any Registrable Securities under the Registration
Statement until it has received copies of the Prospectus as then amended or
supplemented as contemplated in Section 3(e) and notice from the Company that
such Registration Statement and any post-effective amendments thereto have
become effective, and (iv) comply with the prospectus delivery requirements of
the Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.

(c) upon receipt of a notice from the Company of the occurrence of any Material
Event or event of the kind described in Section 3(b)(iii), 3(b)(iv) or 3(b)(vi),
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until the Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(g), or until it is advised in writing by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.

 
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5. Registration Expenses. All reasonable fees and expenses incident to the
performance of, or compliance with, this Agreement by the Company shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, the following: (i) all registration
and filing fees including, without limitation, fees and expenses with respect to
(x) filings required to be made with Nasdaq and (y) compliance with federal and
state securities or Blue Sky laws; (ii) printing expenses; (iii) messenger,
telephone and delivery expenses; (iv) fees and disbursements of counsel for the
Company; and (v) fees and expenses of all other Persons retained by the Company
in connection with the consummation of the transactions contemplated by this
Agreement. In no event, however, shall the Company be responsible for any fees
and expenses of the Special Counsel or any other advisor to the Holders.

6. Indemnification; Contribution.

(a) Indemnification by the Company. The Company shall, to the fullest extent
permitted by Applicable Law, notwithstanding any termination of this Agreement,
indemnify and hold harmless the Securities Holders’ Representative and the
Holders and each Person, if any, who controls the Securities Holders’
Representative or any Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all claims,
losses, damages, liabilities, penalties, judgments, costs (including reasonable
attorneys’ fees and expenses) (collectively, “Losses”), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement or any Prospectus, or any supplements or
amendments thereto, if applicable, or arising out of or relating to any omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in the light of the circumstances
under which they were made) not misleading, except (x) to the extent that such
untrue statements or omissions are made in reliance upon and in conformity with
information regarding a Holder furnished in writing to the Company by such
Holder expressly for use therein, or (y) as a result of the failure of a Holder
to deliver a Prospectus, or any supplement or amendment thereto, to a purchaser
in connection with an offer or sale of the Registrable Securities. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.

(b) Indemnification by the Holders. In connection with any Registration
Statement in which a Holder is participating, such Holder shall, severally and
not jointly with any other Holders, indemnify and hold harmless the Company and
each Person who controls the Company within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act, from and against any and all
Losses, as incurred, arising out of or relating to, any untrue or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus, or any supplements or amendments thereto, if applicable, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in or omitted from any information relating to such Holder furnished
in writing to the Company by such Holder or Special Counsel expressly for use in
such Registration Statement, Prospectus or any amendment or supplement thereto.

 
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity pursuant to Section 6(a) or
6(b) hereunder (an “Indemnified Party”), such Indemnified Party shall as
promptly as practicable notify the Person from whom indemnity is sought (the
“Indemnifying Party) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, however, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that such failure shall have materially and adversely prejudiced
the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses (ii) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel in writing that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, which consent shall not unreasonably
be withheld, conditioned or delayed, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement (i) includes an unconditional release of such Indemnified Party from
all liability arising out of the claims that are the subject matter of such
Proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any Indemnified Party.

If the Indemnifying Party fails or refuses to promptly assume the defense of any
Proceeding, then all reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid by the Indemnifying Party to the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, however, that the Indemnifying Party may require such
Indemnified Party to undertake to reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder or pursuant to Applicable Law).

 
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(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party because of a failure or refusal of a
Governmental Authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for under Section 6(a) or 6(b) was available to such
party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

Notwithstanding the provisions of this Section 6, no Holder shall be required to
indemnify or contribute any amount in excess of the amount received by such
Holder upon the sale of such Holder’s Registrable Securities under a
Registration Statement.

7. Rule 144. The Company agrees, at all times during the Effectiveness Period,
to:

(a) make and keep public information available within the meaning of Rule 144(c)
of the Securities Act;

(b) file with the Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and

(c) furnish to each Holder, so long as such Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports, documents and other information in the possession
of or reasonably obtainable by the Company as such Holder may reasonably request
in availing itself of Rule 144.

 
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8. Compliance with Securities Laws; Restrictions. Any other provision of this
Agreement to the contrary notwithstanding, the Holders shall not, directly or
indirectly, sell, offer to sell, solicit an offer to buy, contract to sell
(including without limitation, any short sale), grant any option to purchase or
right to acquire, acquire any option to dispose of, or otherwise transfer or
dispose of, or pledge, grant a lien on or otherwise encumber, all or any portion
of the Registrable Securities, unless such Registrable Securities are registered
pursuant to an effective registration statement under, or except in accordance
with an exemption from, federal and state securities laws.

9. Miscellaneous.

(a) Remedies. Except as otherwise specifically set forth in this Agreement, the
remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by Applicable Law. In the event of a breach by the Company or
by the Holders of any of their obligations under this Agreement, the Holders or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by Applicable Law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its or their rights under
this Agreement. The Company and the Holders agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a breach
of any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, it or
they shall waive the defense that a remedy at law would be adequate.

(b) No Inconsistent Agreements. Neither the Company nor any of its Affiliates
has as of the date hereof entered into, nor shall the Company or any of its
Affiliates, on or after the date of this Agreement, enter into, any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or which otherwise conflicts with the provisions
hereof. The Company represents and warrants to the Holders that the execution,
delivery and performance by it of this Agreement does not violate the terms of
any other agreement to which it is a party.

(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this Section, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the Securities Holders’
Representative.

(d) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earlier of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice prior to 5:00 p.m., Eastern Standard Time, on a
Business Day, (ii) the first Business Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., Eastern Standard
Time, on any date and earlier than 11:59 p.m., Eastern Standard Time, on such
date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) actual receipt by the
party to whom such notice is required to be given.

 
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(x) if to the Company:
 
Netsmart Technologies, Inc.
3500 Sunrise Highway
Great River, New York 11739 Telecopier: (631) 962-2123 Attention: James L.
Conway, CEO

With a copy to:

Kramer, Coleman, Wactlar & Lieberman, P.C. 100 Jericho Quadrangle
Jericho, New York 11753
Telecopier: (516) 822-4820
Attention: Nancy D. Lieberman, Esq.

(y) if to the Holders, to the address for such holder contained in the stock
ownership record of the Company.

With a copy to:

John Paton
Securities’ Holders Representative
6761 Cook Road
Powell, Ohio, 43065
Telecopier: __________________
 
and

Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Telecopier: (614) 719-4623
Attention: Anker M. Bell, Esq.

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.

(e) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of each Holder and its successors and Permitted Assigns.
The Company may not assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of the Securities Holders’
Representative. The Holders may not assign this Agreement or any of their rights
or obligations hereunder without the prior written consent of the Company which
consent shall not unreasonably be withheld, conditioned or delayed.

 
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(f) Assignment of Registration Rights. Subject to receipt of consent of the
Company pursuant to Section 9(e), any Holder may assign such Holder’s rights
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, to any
transferee of such Holder of all or a portion of the shares of Registrable
Securities if: (i) such Holder agrees in writing with the transferee or assignee
to assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment (at which time the Company shall
deliver a Questionnaire to the transferee or assignee); (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with a
Questionnaire which shall contain, among other things, (A) the name and address
of such transferee or assignee, and (B) the Registrable Securities with respect
to which such registration rights are being transferred or assigned; (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws; (iv) at or before the time the Company
receives the Questionnaire contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement; and (v) the transfer of Registrable Securities
to such transferee or assignee is made pursuant to an exemption from applicable
federal and state securities laws. In the event of an assignment pursuant to
this Section 9(f), the CMHC Securities Holders, through the Reimbursement Fund
established pursuant to the Escrow Agreement, shall pay all incremental costs
and expenses incurred by the Company in connection with filing a Registration
Statement (or an amendment to the Registration Statement) to register the shares
of Registrable Securities assigned to any assignees or transferees of such CMHC
Securities Holders.

(g) Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof. This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

(i) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by Applicable Law.

(j) Termination. This Agreement and the obligations of the parties hereunder
shall terminate upon the expiration of the Effectiveness Period, except for any
liabilities or obligations under Sections 5 and 6 of this Agreement to the
extent such liabilities and obligations accrue prior to the expiration of the
Effectiveness Period.

 
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(k) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable in any respect,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

(l) Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.

 
NETSMART TECHNOLOGIES, INC.

By:
                                                                                
Name:
Title:

SECURITIES HOLDERS’ REPRESENTATIVE:
 
      
                                                                                

John Paton

 
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SCHEDULE A
CMHC SECURITIES HOLDERS

 
CMHC Securities Holders
Number of Shares
   
[names to be inserted at closing]
[numbers of shares to be inserted at closing]

 
 
 
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EXHIBIT B

ESCROW AGREEMENT

This ESCROW AGREEMENT (this “Agreement”) is made and entered into effective as
of this ___ day of September, 2005, by and among NETSMART TECHNOLOGIES, INC., a
Delaware corporation having a principal place of business at 3500 Sunrise
Highway, Great River, New York (“Netsmart”), John Paton, an individual acting as
the attorney-in-fact and representative of the Securities Holders of CMHC (the
“Securities Holders’ Representative”), and ____________________, as escrow agent
(the “Escrow Agent”).

WITNESSETH:

WHEREAS, by a certain Agreement and Plan of Merger dated as of September 20,
2005 among CMHC Systems Inc., an Ohio corporation (“CMHC”), Hayes Acquisition
Corp., an Ohio corporation (“Acquisition”), Netsmart and the Securities Holders’
Representative (the “Merger Agreement”), effective as of the date first written
above (the “Effective Date”), Acquisition is merging with and into CMHC
(resulting in the Surviving Corporation) (the “Transaction”); and

WHEREAS, the Securities Holders have agreed to undertake to perform, be
responsible for, and satisfy the Securities Holders’ Indemnity Obligations; and

WHEREAS, Netsmart is only willing to deliver the Merger Consideration pursuant
to the Merger Agreement and to consummate the Transaction if, among other
things, the parties enter into this Agreement; and

WHEREAS, as the exclusive resource for the satisfaction of the Securities
Holders’ Indemnity Obligations, the Securities Holders have agreed to grant a
security interest in (i) that amount of cash comprising the Securities Holders’
Indemnity Fund as determined pursuant to the Merger Agreement and particularly
Section 2.9 thereof (together with any earnings thereon, the “Securities
Holders’ Indemnity Fund”), (ii) the deposit or trust account in which such cash
and earnings are held and (iii) the proceeds thereof; and

WHEREAS, the parties have further agreed that the Securities Holders’ Indemnity
Fund, the Net Working Capital Adjustment Fund and the Reimbursement Fund shall
be held and disposed of by the Escrow Agent pursuant to the terms of this
Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and as otherwise stated, the parties agree as follows:

1. Escrow Agent. Netsmart and the Securities Holders, acting through the
Securities Holders’ Representative, hereby appoint __________, as Escrow Agent
hereunder in accordance with the terms and conditions of this Agreement. The
Escrow Agent hereby accepts such appointment and agrees to act upon the terms
and conditions provided in this Agreement.

 
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2. Escrow Amount. Upon execution of this Agreement, Netsmart shall deliver, or
cause to be delivered, to the Escrow Agent the Escrow Amount.

3. Capitalized Terms. Unless otherwise indicated or specifically defined, all
capitalized terms used herein shall have the meaning ascribed to them in the
Merger Agreement.

4. Escrow Agent’s Responsibility. The Escrow Agent shall deposit in the
Securities Holders’ Indemnity Fund, the Net Working Capital Adjustment Fund, and
the Reimbursement Fund, respectively, the allocable amounts of the Escrow Amount
computed in accordance with the Merger Agreement and particularly Section 2.9
thereof, and agrees to hold and/or disburse or dispose of the Securities
Holders’ Indemnity Fund, the Net Working Capital Adjustment Fund and the
Reimbursement Fund in accordance with the terms and provisions of this
Agreement.

5. Escrow Period. Subject to the provisions of Section 16 hereof, this Escrow
Agreement shall remain in existence until the later of (i) the date which is
eighteen (18) months from the Effective Date; or (ii) the date of the final
determination of all Outstanding Claims with regard to the Security Holders’
Indemnity Fund (the “Escrow Period”).

6. Terms of Escrow.

(a) Maintenance, Etc. The Securities Holders’ Indemnity Fund, the Net Working
Capital Adjustment Fund and the Reimbursement Fund shall be maintained,
released, administered, disbursed and/or distributed during the Escrow Period in
accordance with the terms hereof.

(b) Investment of the Funds. Each of the Securities Holders’ Indemnity Fund and
the Net Working Capital Adjustment Fund shall be invested and reinvested by the
Escrow Agent in one or more of the investments indicated on Schedule 1 or in
such other investments as Netsmart and the Securities Holders’ Representative
shall instruct the Escrow Agent in writing and which are acceptable to the
Escrow Agent. The Reimbursement Fund shall be invested and reinvested by the
Escrow Agent in one or more of the investments indicated on Schedule 1 or in
such other investments as the Securities Holders’ Representative shall instruct
the Escrow Agent in writing and which are acceptable to the Escrow Agent. The
Escrow Agent shall have the right to liquidate any investments held in order to
provide funds necessary to make required payments under this Agreement. The
Escrow Agent shall have no liability for any loss sustained as a result of any
investments indicated on Schedule 1 or any investment made pursuant to the
instructions of Netsmart and/or the Securities Holders’ Representative or as a
result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or
reinvest the Securities Holders’ Indemnity Fund, the Net Working Capital
Adjustment Fund and the Reimbursement Fund. Receipt, investment and reinvestment
of the Securities Holders’ Indemnity Fund, the Net Working Capital Adjustment
Fund and the Reimbursement Fund shall be confirmed by the Escrow Agent as soon
as practicable by account statement, and Netsmart and the Security Holders’
Representative shall use their best efforts to notify the Escrow Agent of any
discrepancies in any such account statement within thirty (30) calendar days
after receipt thereof. For purposes of this Agreement, (a) each account
statement shall be deemed to have been received by the party to whom directed on
the earlier to occur of (i) actual receipt thereof and (ii) three (3) “Business
Days” (as hereinafter defined) after the deposit thereof in the United States
Mail, postage prepaid, and (b) the term “Business Day” shall mean any day of the
year, excluding Saturday, Sunday and any other day on which national banks are
required or authorized to close in the State of Ohio.

 
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7. Security Interest in Securities Holders’ Indemnity Fund.

(a) The Securities Holders, acting through the Securities Holders’
Representative, hereby grant to Netsmart and its successors and assigns a
security interest in the Securities Holders’ Indemnity Fund, in the deposit and
trust account or accounts in which the Securities Holders’ Indemnity Fund is
held and in the proceeds thereof, all to secure the Security Holders’ Indemnity
Obligations pursuant to and in accordance with the terms of this Agreement;
provided, however, anything contained herein or elsewhere to the contrary
notwithstanding, Netsmart (for itself and its successors and assigns) and the
other parties acknowledge and agree that (i) the Securities Holders’ Indemnity
Fund shall be the exclusive resource for the satisfaction of the Securities
Holders’ Indemnity Obligations and (ii) neither Netsmart nor its successors and
assigns, nor any other party, shall have recourse to any other asset or assets
of the Securities Holders (or any of them) or the Securities Holders’
Representative to satisfy the Securities Holders’ Indemnity Obligations.

(b) Netsmart shall release its security interest in the Securities Holders’
Indemnity Fund to the extent of any disbursement or distribution thereof made by
the Escrow Agent to the Securities Holders in accordance with the terms of this
Agreement and, by virtue of such disbursement or distribution and without
further act, shall be deemed to have so released its security interest therein
to such extent. Anything contained herein or elsewhere to the contrary
notwithstanding, neither the Securities Holders nor the Securities Holders’
Representative shall have the right to utilize any portion of the Securities
Holders’ Indemnity Fund for the reimbursement of out-of-pocket fees and expenses
and other obligations of, or incurred by, the Securities Holders’ Representative
in connection with the Merger Agreement, the Registration Rights Agreement and
this Agreement unless and until Netsmart, to the extent herein provided,
releases its security interest in such Fund in connection with any distribution
or disbursement thereof to be made by the Escrow Agent.

8. Claims by Netsmart and the Netsmart Indemnified Parties Against the
Securities Holders’ Indemnity Fund.

(a) Assertion of Claims. Upon receipt by the Escrow Agent at any time after the
Effective Date and on or before the termination of the Escrow Period of a
certificate signed by an officer of Netsmart on behalf of itself or any other
Netsmart Indemnified Party (an “Officer’s Certificate” stating that an event
implicating the Securities Holders’ Indemnity Obligations (an “Indemnification
Event”) has occurred, setting forth in reasonable detail the factual and/or
legal basis and circumstances of the Indemnification Event, and identifying the
specific amount of the recoverable Loss (subject to the Basket, if applicable),
suffered by one or more of the Netsmart Indemnified Parties (the “Claim”),
unless the Escrow Agent has received an Objection (as hereinafter defined) in
compliance with Section 8(b) hereof, the Escrow Agent shall deliver to Netsmart,
after the elapse of the Waiting Period (as hereinafter defined), the lesser of
the following:

 
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(i)
that amount in the Securities Holders’ Indemnity Fund as is sufficient to
satisfy fully the Securities Holders’ Indemnity Obligations with regard to the
Claim (or Claims) set forth in the Officer’s Certificate, including accrued
interest and any other charges, fees and expenses to which the Netsmart
Indemnified Party is entitled under Article VIII of the Merger Agreement; or

 
(ii)
if the amount in the Securities Holders’ Indemnity Fund is not so sufficient,
the balance of the Securities Holders’ Indemnity Fund.

(b) Objection by Securities Holders.

 
(i)
At the time of delivery of any Officer’s Certificate to the Escrow Agent (a
“Delivery”), a duplicate copy of such Officer’s Certificate shall be delivered
to the Securities Holders’ Representative, on behalf of all of the Securities
Holders (with proof of such delivery to the Escrow Agent, which proof of
delivery may consist of a photocopy of the registered or certified mail or
overnight courier receipt or the signed receipt if delivered by hand) (the
“Proof of Delivery”). The Escrow Agent shall have no responsibility to determine
whether a copy of the Officer’s Certificate was delivered to the Securities
Holders’ Representative other than confirming it has received the Proof of
Delivery from Netsmart. The Securities Holders, acting through the Securities
Holders’ Representative, shall have a period of thirty (30) calendar days
following each such Delivery (the “Waiting Period”) within which to object in a
written statement (an “Objection”) to the Claims made in the Officer’s
Certificate. The Objection shall state in reasonable detail the factual and/or
legal basis for such Objection and shall be delivered to the Escrow Agent, with
a copy of such Objection to Netsmart, prior to the expiration of the Waiting
Period.

 
(ii)
If the Securities Holders, acting through the Securities Holders’
Representative, make an Objection prior to the expiration of the Waiting Period,
the Escrow Agent shall not make any deliveries or payments of or from the
Securities Holders’ Indemnity Fund in respect of the contested portion of such
Claim or Claims in the manner and to the extent contemplated in Section 8(a)
hereof and until the Claim or Claims is or are resolved finally pursuant to
Sections 8(c) and/or 8(d) hereof. Conversely, absent a timely Objection by the
Securities Holders, acting through the Securities Holders’ Representative, after
the expiration of the Waiting Period, the Claim or Claims shall be deemed to
have been finally determined in favor of the Netsmart Indemnified Parties as if
adjudicated and reduced to a judgment, and the Escrow Agent shall make payment
or delivery of the Securities Holders’ Indemnity Fund to Netsmart in the manner
and to the extent described in Section 8(a) hereof.

 
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(iii)
Nothing herein shall be construed to permit the Escrow Agent to determine the
sufficiency or legitimacy of either an Officer’s Certificate or an Objection.

(c) Resolution of Conflicts. If the Securities Holders, acting through the
Securities Holders’ Representative, deliver an Objection with respect to any
Claim or Claims made in any Officer’s Certificate in accordance with Section
8(b) hereof, Netsmart and the Security Holders’ Representative shall attempt in
good faith for a period of thirty (30) days thereafter (the “Negotiation
Period”) to agree upon the respective rights of the parties with respect to each
of such Claims or with respect to the Securities Holders’ Indemnity Fund, as the
case may be. If Netsmart and the Securities Holders’ Representative should so
agree, a memorandum setting forth such accord shall be prepared and signed by
each of the parties and furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and to distribute or deliver amounts
from the Securities Holders’ Indemnity Fund in accordance with the terms
thereof.

(d) Litigation. In the event Netsmart and the Securities Holders’ Representative
are unable to reach an accord with regard to all of the Claims asserted in the
Officer’s Certificate by the end of the Negotiation Period, then either party
may institute such actions or proceedings as they deem appropriate to resolve
the dispute, and, except as otherwise expressly provided herein, the Escrow
Agent shall take no actions with respect to deliveries, disbursements or
distributions from the Securities Holders’ Indemnity Fund in connection with
such Claim until either (i) it receives a final, non-appealable court order in
respect of such Claim, or (ii) a memorandum signed by Netsmart and the
Securities Holders’ Representative setting forth the agreement of the parties in
respect of such Claim, following which, in either case, the Escrow Agent shall
act in accordance with such order or memorandum.

(e) Outstanding Claim. Once asserted, a Claim shall be deemed to be an
“Outstanding Claim” until finally resolved in accordance with the terms of this
Agreement.

9. Scheduled Distributions Out of the Securities Holders’ Indemnity Fund. 

(a) The Escrow Agent shall also release and distribute amounts from the
Securities Holders’ Indemnity Fund in accordance with the following:

 
(i)
To the Securities Holders’ Representative on the one year anniversary of the
Effective Date, that amount of the Securities Holders’ Indemnity Fund, if any,
which reduces the amount of the Securities Holders’ Indemnity Fund then being
held by the Escrow Agent to (x) 66.7% of the original amount deposited into the
Securities Holders’ Indemnity Fund by the Escrow Agent pursuant to Section 4
hereof (“One Year Balance”), plus (y) such additional amount as is reasonably
sufficient to satisfy the Securities Holders’ Indemnity Obligations in respect
of Outstanding Claims, it being understood that if the balance of the Securities
Holders’ Reimbursement Fund is less than the One Year Balance, there will be no
distribution made to the Securities Holders’ Representative.

 
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(ii)
To the Securities Holders’ Representative on the eighteen month anniversary of
the Effective Date (the “Eighteen Month Anniversary”), the balance of the
Securities Holders’ Indemnity Fund, less an amount which is reasonably
sufficient to satisfy the Securities Holders’ Indemnity Obligations in respect
of Outstanding Claims, if any. Upon the resolution of all such Outstanding
Claims (or in the event that there are no Outstanding Claims, upon the elapse of
the Escrow Period), the Escrow Agent shall deliver to the Securities Holders’
Representative the balance of the Securities Holders’ Indemnity Fund not
required to satisfy Securities Holders’ Indemnity Obligations.

All distributions shall be deemed to have been made ratably among the Securities
Holders based upon their Pro Rata Percentage.

(b) Delivery or payment to the Securities Holders’ Representative of any
distribution on an anniversary date or the balance of the Securities Holders’
Indemnity Fund shall constitute for all purposes delivery or payment to the
Securities Holders.

10. Distributions Out of the Net Working Capital Adjustment Fund. Upon receipt
by the Escrow Agent of a certificate signed by an officer of Netsmart and the
Securities Holders’ Representative (a “Certificate”), the Escrow Agent shall
release and distribute amounts from the Net Working Capital Adjustment Fund in
accordance with the following:

 
(i)
If the Certificate states that the Proposed Closing Working Capital Statement
reflects net working capital equal to or above a deficit of $7,500,000 and has
become final in accordance with, and by virtue of, Section 5.5(c)(iv), to the
Securities Holders’ Representative, within five (5) Business Days of the date of
receipt of the Certificate by the Escrow Agent, the entire amount in the Net
Working Capital Adjustment Fund.

 
(ii)
If the Certificate states that the Final Net Working Capital is below a deficit
of $7,500,000, (A) to Netsmart within five (5) Business Days of the date of
receipt of the Certificate by the Escrow Agent, that amount of the Net Working
Capital Adjustment Fund which is equal to the Reduction Amount and (B) if the
Reduction Amount is less than the full amount of the Net Working Capital
Adjustment Fund, to the Securities Holders’ Representative, within five (5)
Business Days of the date of receipt of the Certificate by the Escrow Agent,
that amount of the Net Working Capital Adjustment Fund which is equal to the
full amount of the Net Working Capital Adjustment Fund and the Reduction Amount.

 
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(iii)
If the Certificate states that (A) the Net Working Capital Adjustment Fund has
not been disbursed pursuant to clause (i) of this Section 10 and (B) the Final
Net Working Capital is equal to or greater than a deficit of $7,500,000, to the
Securities Holders’ Representative within five (5) Business Days of the date of
receipt of the Certificate by the Escrow Agent, the entire amount in the Net
Working Capital Adjustment Fund.

11. Authorization of Netsmart and the Securities Holders’ Representative.

(a) Any action taken by the Security Holders’ Representative shall for all
purposes be deemed to have been taken by, and otherwise be binding upon, the
Securities Holders. Any notices given or deliveries made to the Securities
Holders’ Representative shall for all purposes herein be deemed to have been
given or made to each of the respective Securities Holders.

(b) Any action taken by Netsmart shall for all purposes be deemed to have been
taken by, and otherwise be binding upon, the Netsmart Indemnified Parties. Any
notices given or deliveries made to Netsmart shall for all purposes herein be
deemed to have been given or made to each of the respective Netsmart Indemnified
Parties.

12. Duties of the Escrow Agent.

(a) The Escrow Agent shall maintain, control and safeguard the Securities
Holders’ Indemnity Fund, the Net Working Capital Adjustment Fund and the
Reimbursement Fund during the term of this Agreement and shall cause the
Securities Holders’ Indemnity Fund, the Net Working Capital Adjustment Fund and
the Reimbursement Fund to be held, administered and disposed of only in
accordance with the terms hereof. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied.
The Escrow Agent shall have no liability under and, except as expressly required
by Section 18(d) hereof, no duty to inquire as to the provisions of any
agreement other than this Agreement. The Escrow Agent may rely upon and shall
not be liable for acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any such document. The Escrow Agent shall have no duty to
solicit any payments which may be due to it or to the Securities Holders’
Indemnity Fund, the Net Working Capital Adjustment Fund or the Reimbursement
Fund. The Escrow Agent shall not be liable for any action taken or omitted by it
in good faith except to the extent that a court of competent jurisdiction
determines that the Escrow Agent’s gross negligence or willful misconduct was
the primary cause of any loss to Netsmart and/or the Securities Holders. The
Escrow Agent may execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and shall be liable only for
the careful selection of any such agent or attorney) and may consult with
counsel, accountants and other skilled persons to be selected and retained by
it. The Escrow Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons. In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party which, in its opinion, conflict
with any of the provisions of this Agreement, it shall be entitled to refrain
from taking any action and its sole obligation shall be to keep safely all
property held in escrow until it shall be directed otherwise in writing by all
of the other parties or by a final order or judgment of a court of competent
jurisdiction. None of the provisions contained in this Agreement shall require
the Escrow Agent to use or advance its own funds in the performance of any of
its duties or the exercise of any of its rights or powers hereunder. In no event
shall the Escrow Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.

 
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(b) Notwithstanding anything to the contrary, if after the Eighteen Month
Anniversary, the Outstanding Claims exceed the value of the Securities Holders’
Indemnity Fund, the Escrow Agent shall have the discretion to elect to deposit
or deliver the entire Securities Holders’ Indemnity Fund into the custody of a
court of competent jurisdiction, in which event the Escrow Agent shall be
released from all further liability and obligation hereunder.

(c) If the Securities Holders’ Indemnity Fund, the Net Working Capital
Adjustment Fund or the Reimbursement Fund, or any portion of any thereof, shall
be attached, garnished or levied upon pursuant to an order of court, or the
delivery thereof shall be stayed or enjoined by an order of court, or any other
order, judgment or decree shall be made or entered by any court affecting the
whole or any part of the Securities Holders’ Indemnity Fund, the Net Working
Capital Adjustment Fund or the Reimbursement Fund, or any act of the Escrow
Agent, the Escrow Agent is hereby expressly authorized in its sole discretion to
obey and comply with all final writs, orders, judgments or decrees so entered or
issued by any court, without the necessity of inquiry whether such court had
jurisdiction; and, if the Escrow Agent obeys or complies with any such writ,
order, judgment or decree, it shall not be liable to any of the parties or to
any other person or entity by reason of such compliance. The Escrow Agent shall
give written notice promptly to Netsmart and the Securities Holders’
Representative if all or any part of the Securities Holders’ Indemnity Fund, the
Net Working Capital Adjustment Fund or the Reimbursement Fund shall be attached,
garnished, levied upon or otherwise made the subject of judicial action. If any
dispute arises with respect to the Securities Holders’ Indemnity Fund, the Net
Working Capital Adjustment Fund or the Reimbursement Fund and/or ownership or
right of possession of the Securities Holders’ Indemnity Fund, the Net Working
Capital Adjustment Fund or the Reimbursement Fund, the Escrow Agent is
authorized and directed to retain in its possession without liability to anyone
all or any part of the Securities Holders’ Indemnity Fund, the Net Working
Capital Adjustment Fund or the Reimbursement Fund, as the case may be, until
such dispute shall have been settled either by mutual agreement of the parties
concerned or by a final order, decree or judgment of a federal or state court of
competent jurisdiction; provided, however, the Escrow Agent shall be under no
duty to institute, defend or participate in any such proceedings.

 
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(d) Netsmart certifies that its true and correct Taxpayer Identification Number
(“TIN”) assigned by the Internal Revenue Service is set forth in Schedule 1. Any
payments of income shall be subject to applicable withholding regulations then
in force in the United States or any other jurisdiction, as applicable. Each of
Netsmart and the Securities Holders agree that all interest or other income
earned on the Securities Holders’ Indemnity Fund and the Net Working Capital
Adjustment Fund under the Agreement shall be credited to the party to whom
proceeds of the Securities Holders’ Indemnity Fund and the Net Working Capital
Adjustment Fund are released and reported by such party to the Internal Revenue
Service or any other taxing authority.

13. Indemnification of Escrow Agent. Netsmart and the Securities Holders,
jointly and severally, agree to and shall indemnify, defend and save harmless
the Escrow Agent from any and all claims, liabilities, losses, damages, fines,
penalties and expenses (including out-of-pocket and incidental expenses and fees
and expenses of in-house or outside counsel) (“Losses”) arising out of or in
connection with (i) its execution and performance of this Agreement, except to
the extent that such Losses are due to the gross negligence or willful
misconduct of the Escrow Agent, or (ii) its following any instructions or other
directions from Netsmart or the Securities Holders, except to the extent that
its following any such instruction or direction is expressly forbidden by the
terms hereof. The provisions of this Section 13 shall survive the termination of
this Agreement and the resignation or removal of the Escrow Agent for any
reason. The indemnifications set forth in this Section 13 are intended to and
shall include the indemnification of all affected agents, directors, officers
and employees of the Escrow Agent.

14. Resignation of Escrow Agent. The Escrow Agent may resign at any time upon
giving at least thirty (30) days written notice to the other parties; provided,
however, that no such resignation shall become effective until the appointment
of a successor Escrow Agent in accordance with this Section 14. The parties
shall use their commercially reasonable efforts to agree mutually on a successor
escrow agent within thirty (30) days after receiving such notice. If the parties
fail to agree upon a successor escrow agent within such time, the Escrow Agent
shall have the right to appoint a successor escrow agent. The successor escrow
agent shall execute and deliver an instrument accepting such appointment, and
such successor escrow agent shall, without further acts, be vested with all the
rights, powers, and duties of the predecessor Escrow Agent as if originally
named as escrow agent. The Escrow Agent shall thereafter be discharged from any
further duties and liability under this Agreement.

15. Escrow Agent Fees and Expenses. All out-of-pocket expenses and the fees
(which fees are set forth on Schedule 1) of the Escrow Agent for performance of
its duties hereunder in connection with the Securities Holders’ Indemnity Fund
and the Net Working Capital Adjustment Fund shall be borne and paid equally by
Netsmart and the Securities Holders’ Representative on behalf of the Securities
Holders. All out-of-pocket expenses and the fees (which fees are set forth on
Schedule 1) of the Escrow Agent for the performance of its duties hereunder in
connection with, or relating to, the Reimbursement Fund shall be borne
exclusively by the Securities Holders from the Reimbursement Fund.

 
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16. Termination of the Escrow. This Escrow Agreement shall terminate upon the
sooner occurrence of any of the following events (“Termination Event”):

(a) the expiration of the Escrow Period without there being any Outstanding
Claims;

(b) the disbursement or distribution of the entire Securities Holders’ Indemnity
Fund in accordance with the terms of this Agreement;

(c) the delivery or deposit of the Securities Holders’ Indemnity Fund into court
as provided in Section 12(b) hereof; or

(d) by written agreement of the parties.

17. Reimbursement Fund.

(a) Use of the Reimbursement Fund. Pursuant to Section 9.11 of the Merger
Agreement and this Section 17, the Securities Holders’ Representative is
entitled to full reimbursement for out-of-pocket fees and expenses and other
obligations of or incurred by the Securities Holders’ Representative in
connection with the Merger Agreement, the Registration Rights Agreement and this
Agreement. The Reimbursement Fund shall be used to pay that portion of the fees
and expenses of the Escrow Agent to be paid by the Securities Holders pursuant
to Section 15 hereof and to reimburse the Securities Holders’ Representative for
out-of-pocket fees and expenses and to pay other obligations to or of the
Securities Holders’ Representative, or shall (to the extent not previously
distributed to the Securities Holders’ Representative as provided for above) be
distributed to the Securities Holders at such time as the Securities Holders’
Indemnity Fund is fully and finally distributed in accordance with the terms of
this Agreement. All distributions shall be deemed to have been made ratably
among the Securities Holders based upon their respective Pro Rata Percentage as
set forth on Schedule 2. In the event the Reimbursement Fund is unavailable or
insufficient to satisfy in full the out-of-pocket fees and expenses of and other
obligations to or of the Securities Holders’ Representative, then the Securities
Holders’ Representative shall be entitled to seek reimbursement for such
out-of-pocket fees and expenses and other obligations to or of the Securities
Holders’ Representative from the Securities Holders directly in accordance with
Article IX of the Merger Agreement (but in no event from the Securities Holders’
Indemnity Fund, except from distributions when they are to be made to the
Securities Holders). Anything contained herein or elsewhere to the contrary
notwithstanding, neither Netsmart nor its successors and assigns shall have any
interest whatsoever in the Reimbursement Fund or the earnings thereon.

(b) Treatment of the Reimbursement Fund. The Escrow Agent shall hold and
safeguard the Reimbursement Fund during the Escrow Period, shall treat the
Reimbursement Fund as a trust fund for the benefit of the Securities Holders and
the Securities Holders’ Representative in accordance with the terms of this
Agreement, and shall hold and dispose of the Reimbursement Fund only in
accordance with the terms hereof.

 
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(c) Disbursement of the Reimbursement Fund. The Escrow Agent shall disburse the
Reimbursement Fund only in accordance with a written instrument delivered to the
Escrow Agent that is executed by the Securities Holders’ Representative and that
instructs the Escrow Agent as to the disbursement of some or all of the
Reimbursement Fund. Upon receipt by the Escrow Agent of a written instrument
that is executed by the Securities Holders’ Representative and that instructs
the Escrow Agent as to the disbursement of some or all of the Reimbursement
Fund, the Escrow Agent shall within two (2) Business Days of such instruction
disburse to the Securities Holders’ Representative the amount so instructed in
such written instrument, whereupon the then current Reimbursement Fund balance
shall be reduced by such amount.

(d) Distribution of Earnings; Tax Reporting. Any interest or income earned on
the Reimbursement Fund shall be allocated to the Securities Holders in
accordance with their respective Pro Rata Percentages. For tax reporting
purposes, all interest or other income earned from the investment of the
Reimbursement Fund (and all cash dividends earned in respect thereof) in any tax
year shall, to the extent such interest or other income is distributed by the
Escrow Agent to any person or entity pursuant to the terms of this Agreement
during such tax year, be reported as allocated to such person or entity.

18. General Provisions.

(a) Notices. Any and all notices or service of process required or permitted
hereunder shall be in writing given as follows:

If to Securities Holders or the Securities Holders’ Representative:

John Paton
6761 Cook Road
Powell, Ohio 43065

with a copy to:

Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
Fax: (614) 719-4623
Attn: Anker M. Bell, Esq.

 
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If to Netsmart or the Netsmart Indemnified Parties:

Netsmart Technologies, Inc.
3500 Sunrise Highway
Great River, New York 11739
Attention: James Conway
Tel: (631) 968-2036
Fax: (631) 968-2123

with a copy to:

Kramer, Coleman, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle, Suite 225
Jericho, New York 11753
Attention: Nancy D. Lieberman or Edward S. Wactlar, Esq.
Tel: (516) 822-4820
Fax: (516) 822-4824

if to Escrow Agent:

______________________
________________________
______________, _________

Any notice required to be made within a stated period of time shall be
considered timely made if in the manner prescribed herein, it is mailed,
delivered or telefaxed, as the case may be before midnight of the last day of
the stated period. Any party may give any notice or other communication
hereunder by U.S. certified mail, postage prepaid, return receipt requested,
personal delivery or using a nationally recognized overnight courier service,
telecopy or telex. Any party may change the address to which notices, service of
process, requests, demands, claims or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth herein.

(b) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

(c) Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.

(d) Entire Agreement. This Agreement, together with the provisions of the Merger
Agreement, to the extent applicable, (a) shall constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; (b) except as expressly provided
herein, is not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation of law or otherwise except
as specifically agreed to in writing by the parties.

 
B-12

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(e) Severability. In the event that any part of this Agreement is declared by
any court or other judicial or administrative body to be null, void, or
unenforceable, said part shall survive to the extent it is not so declared, and
all of the other provisions of this Agreement shall remain in full force and
effect.

(f) Amendment; Waivers. This Agreement may not be amended or modified, and any
of the terms, covenants, representations, warranties, or conditions hereof may
not be waived, except by a written instrument executed by all of the parties, or
in the case of a waiver, by the party waiving compliance. Any waiver by any
party of any condition, or of the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement, in any one or more
instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation, or warranty of this Agreement.

(g) Governing Law; Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law thereof. For all actions and proceedings, the parties hereby irrevocably
and unconditionally (i) consent to the personal jurisdiction of the United
States District Court for the Eastern District of New York located in Central
Islip, New York, and to the designation of such action as a “Long Island
Action,” or if subject matter jurisdiction is lacking in such Court, to the
jurisdiction of the Supreme Court of the State of New York for the County of
Nassau; (ii) agree not to commence any action, suit or proceeding arising out of
or relating to this Agreement except in such courts, (iii) agree that service of
any process, summons, notice or document sent by U.S. certified mail, return
receipt requested, or by nationally recognized overnight courier service to
either Netsmart on behalf of any one or more of the Netsmart Indemnified Parties
or to the Securities Holders’ Representative on behalf of any one or more of the
Securities Holders, at their respective addresses herein provided, shall be
legally effective and sufficient for all purposes; and (iv) waive any defense or
objection to proceeding in such courts, including those objections and defenses
based on an alleged lack of personal jurisdiction, improper venue and/or forum
non-conveniens.

(h) Rules of Construction. The parties agree that they each have been
represented by counsel during the negotiation and execution of this Agreement
and acknowledge that they each understand all provisions of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

(i) Automatic Succession. Notwithstanding anything this Agreement to the
contrary, any company into which the Escrow Agent may be merged or with which it
may be consolidated, shall become the Escrow Agent hereunder with all of the
duties and obligations set forth herein.

 
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(j) Time of Essence. Time is of the essence in this Agreement.

(k) Conflicts. Whenever any conflict exists between the terms of this Agreement
and the Merger Agreement, the pertinent terms of this Agreement shall prevail.

(l) Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the lawful and permitted successors and assigns of the parties.

(m) Further Efforts. All parties to this Agreement agree to take any and all
actions and to sign, seal, execute, acknowledge and deliver any and all
documents and instruments, as may be reasonably necessary to effectuate the
terms hereof.

(n) Attorneys’ Fees. In connection with any litigation arising out of, in
connection with, or as a result of this Agreement, or which seeks an
interpretation of this Agreement, the prevailing party shall be entitled to
recover from the other the costs and expenses of such litigation, including
reasonable attorneys’ fees and costs and including, but not limited to, expert
witness fees and expenses. 

(o) Right of Interpleader. Should any controversy arise involving the parties or
any of them or any other Person with respect to this Agreement or the Securities
Holders’ Indemnity Fund, the Net Working Capital Adjustment Fund or the
Reimbursement Fund, or if the Escrow Agent should have reasonable doubt as to
what action to take, the Escrow Agent shall have the right, but not the
obligation, either to (a) withhold delivery of the Securities Holders’ Indemnity
Fund, the Net Working Capital Adjustment Fund or the Reimbursement Fund, as the
case may be, until the controversy is resolved, the conflicting demands are
withdrawn or its doubt is resolved or (b) institute a petition for interpleader
in any court of competent jurisdiction to determine the rights of the parties.
Should a petition for interpleader be instituted, or should the Escrow Agent be
threatened with litigation or become involved in litigation in any manner
whatsoever in connection with this Escrow Agreement, the Securities Holders’
Indemnity Fund or the Net Working Capital Adjustment Fund, Netsmart and the
Securities Holders, or in connection with the Reimbursement Fund, the Securities
Holders, hereby agree to reimburse the Escrow Agent for its attorneys’ fees and
any and all other expenses, losses, costs and damages incurred by the Escrow
Agent in connection with or resulting from such threatened or actual litigation
prior to any disbursement hereunder.

 
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
and year first above written.

Netsmart:
NETSMART TECHNOLOGIES, INC.
 
 
By                                                                      
                                              , President
 
 
 
 
Securities Holders’ Representative:
                                                         
Name:                                                                 
 
 
Escrow Agent:
__________________,
 
 
By                                                                       
Its:                                                                       

 
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SCHEDULE 1

1.
(a) Escrow Administration Fee, Security Holders’ Indemnity Fund - $________

  (b) Escrow Administration Fee, Reimbursement Fund - $________

  (c) Escrow Administration Fee, Net Working Capital Adjustment Fund - $________

Each Escrow Administration Fee covers the Escrow Agent’s usual and customary
ministerial duties, including record keeping, document compliance and such other
duties and responsibilities expressly set forth in the governing documents for
each transaction. Each Escrow Adminis-tration Fee is payable upon closing and
annually (on a pro rata basis for partial years) in advance thereafter if
applicable.

2.
Investments: [specify]

 

 

3.
Taxpayer Identification Number:

Netsmart: ___________________________

 
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SCHEDULE 2

   
Name of Securities Holder
Pro Rata Percentage
           

 
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EXHIBIT C

SECOND AMENDMENT TO LEASE AGREEMENT
AND ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT

THIS SECOND AMENDMENT TO LEASE AGREEMENT AND ASSIGNMENT AND ASSUMPTION OF LEASE
AGREEMENT (this “Amendment”) is entered into and effective as of the ___ day of
September, 2005 (the “Effective Date”), by and among 570 Metro Place North
Limited Partnership, an Ohio limited partnership, having offices at 6761 Cook Rd
Powell, OH 43065 USA (hereinafter called “Lessor”), CMHC Systems, Inc., an Ohio
corporation, having offices at 570 Metro Place North, Dublin, Ohio 43017
(hereinafter called “Assignor”) and Netsmart Technologies, Inc., a Delaware
corporation, having offices at 3500 Sunrise Highway, Great River, New York,
11739 (hereinafter called “Lessee”).

BACKGROUND INFORMATION

A. As of the 6th day of January, 1994, Lessor and Assignor entered into that
certain Lease Agreement (the “Initial Lease”), as amended by the First Amendment
to Lease Agreement dated as of April 29, 1999 (the “First Amendment,” and
collectively with the Initial Lease, the “Lease”), for the premises located at
570 Metro Place North, Dublin, Ohio 43017 (the “Premises”). A copy of the Lease
is attached hereto as Exhibit A.

B. Lessor and Assignor previously agreed to extend the term of the Lease for two
successive five year periods pursuant to a letter agreement dated March 25, 2004
(the “Letter Agreement”).

C. Assignor desires to assign to Lessee all of Assignor’s right, title, interest
and obligations in and to the Lease and Lessee desires to assume all of
Assignor’s right, title, interest and obligations under the Lease.

D. The parties desire to further amend the Lease as set forth herein.

STATEMENT OF AGREEMENT

Section 1. Assignment and Assumption of Lease.

Section 1.1. Assignment of Lease. Effective on the Effective Date, Assignor
transfers and assigns to Lessee all of Assignor’s right, title and interest in
and to, and rights and obligations under, the Lease. Assignor hereby certifies
to Lessee:

 
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i. The Lease is in full force and effect and has not been modified or revised
except as set forth herein.

ii. The fixed annual rent under the Lease is $377,172 per annum and the fixed
annual rent has been paid by Assignor through September 30, 2005.

iii. To Assignor's knowledge, neither Assignor nor Lessor is in default in
respect of any of its respective obligations under the Lease.

Section 1.2. Assumption of Lease. Effective on the Effective Date, Lessee, for
the benefit of Assignor and Lessor (i) accepts the assignment of the Lease;
(ii) agrees to be bound by and to perform all of the terms, covenants and
obligations under the Lease from and after the Effective Date; and (iii) agrees
to assume all obligations of Assignor thereunder in respect thereof arising from
and after the Effective Date.

Section 1.3. Consent by Lessor. Lessor hereby certifies to Lessee:

i. The Lease is in full force and effect and has not been modified or revised
except as set forth herein.

ii. The fixed annual rent under the Lease is $377,172 per annum and the fixed
annual rent has been paid by Assignor through September 30, 2005.

iii. To Lessor's knowledge, neither Assignor nor Lessor is in default in respect
of any of its respective obligations under the Lease.

iv. Lessor consents to the assignment and assumption of the Lease set forth
herein.

v. Lessor has received no notice of, and to Lessor's knowledge there are no,
special assessments currently against the property.

Section 2. Term. Notwithstanding any provision of the Lease or the Letter
Agreement to the contrary, the term of the Lease shall expire on September 30,
2010 (the “Original Term”). The Letter Agreement is hereby rescinded and null
and void.

Section 3. Option to Renew. Article IV of the Original Lease and Section 3 of
the First Amendment are deleted in their entirety. The following is substituted
for Article IV of the Original Lease:

 
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ARTICLE IV
OPTION TO RENEW

Lessee is hereby given the right to renew the term of this Lease for one (1)
additional period of three (3) years (the “Renewal Term”) commencing on October
1, 2010, upon the same terms and conditions as provided in the Lease, except
that the fixed annual rent during the Renewal Term shall be an amount equal to
the product of (i) $377,172; multiplied by (ii) one plus the percentage change
in the CPI (as hereinafter defined) from the month August 2005 to the month of
August 2010. The “CPI” shall mean Consumer Price Index, All Urban Consumers
(C.P.I.-U), U.S. City Average, All-Items Index (base year/1982-84=100), as
published by the Bureau of Labor Statistics, United States Department of Labor.
In the event that at any time during the term hereof the United States Bureau of
Labor Statistics shall discontinue the issuance of the CPI, then in such event
the CPI shall be any other standard nationally recognized cost-of-living index
then published by Prentice-Hall, Inc. or any other nationally recognized
publisher of similar statistical information designated by Lessor. Lessee shall
notify Lessor in writing of Lessee’s exercise of the Renewal Term at least nine
(9) months prior to the expiration of the Original Term and thereupon this Lease
will be extended for the Renewal Term without the execution of any further
document.

Section 4. Rent.

Section 4.1. The last sentence of the first paragraph of Article VII of the
Original Lease is deleted in its entirety and the following is substituted
therefore:

Until further notice from Lessor to Lessee, rent checks shall be payable and
mailed to Lessor at:
P.O. Box 729 Dublin, OH 43017.

Section 4.2. The last sentence of the second paragraph of Article VII of the
Original Lease, to wit:“Annual rent shall be adjusted annually for each
following lease year commencing January 1, 1995, to accommodate adjustments for
(i) inflation and (ii) mortgage amortization costs of Lessor, said adjustments
to be mutually agreed upon by Lessor and Lessee.” is deleted in its entirety.

 
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Section 5. Taxes. The second paragraph of Article IX of the Original Lease is
hereby deleted in its entirety and the following is substituted therefor:

During the term of this Lease, Lessee shall pay to Lessor an amount equal to all
real estate taxes and assessments payable with respect to the Premises
(“Taxes”). In the event there is any special assessment or assessment which may
be paid in installments, Lessor shall elect to make such payments in
installments. Lessee shall pay to Lessor monthly installments of Taxes on or
before the first day of each calendar month, in advance, in an amount reasonably
estimated by Lessor. The estimated monthly installment for calendar year 2005 is
$5,510 per month. Upon receipt of all bills for Taxes payable for any year
during the Term Lessor shall furnish Lessee with a written statement of the
actual amount of Taxes for such year. If the total monthly installments paid by
Lessee under this Section shall be less than the actual amount due from Lessee
for such year, Lessee shall pay to Lessor such deficiency within ten (10) days
after demand therefor by Lessor; and if the total amount paid by Lessee shall
exceed such actual amount due from Lessee for such year, such excess shall be
credited against the next installment of Taxes due from Lessee to Lessor. For
the year in which this Lease commences and terminates, Lessee’s liability for
its proportionate share of the Taxes for such year shall be subject to a prorata
adjustment based on the number of days of said years during which the Term is in
effect. A copy of a tax bill or assessment bill submitted by Lessor to Lessee
shall at all times be sufficient evidence of the amount of the Taxes. Lessee’s
obligations under this Section shall survive the expiration of the Term. Lessee
shall have the right to contest the amount or legality of any Taxes and make
application for the reduction thereof, and Lessor, at the request of Lessee,
shall execute any reasonable instruments or documents necessary in connection
with such contest or application.

Section 6. Repairs.

Section 6.1. The second paragraph of Article X of the Original Lease is hereby
deleted in its entirety and the following is substituted therefor:

Lessor shall make all structural repairs to the building and premises, whether
interior or exterior, and shall repair and maintain in good condition the roof,
exterior walls, foundation, gutters and downspouts. Lessee shall make all
replacements, repairs and perform all maintenance and custodial services for the
parking areas, and shall maintain the driveways, parking and other paved areas,
and sidewalks in good repair. Lessee shall keep the parking and easement areas
open and accessible and reasonably free from snow, ice, debris and other
hindrances.

Section 6.2. Lessor shall, on or before October 31, 2006, at reasonable cost and
expense, complete the maintenance and repair items at the Premises set forth on
Exhibit B attached hereto (the “Lessor Repair Items”).

Section 6.3. Lessee shall, within thirty (30) days after receipt of an invoice
from Lessor, reimburse Lessor for 50% of the actual, out-of-pocket costs of each
of the Lessor Repair Items.

 
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Section 7. Notices. The notice addresses for Lessor and Lessee set forth in
Article XXIV of the Original Lease are deleted in their entirety and the
following is substituted therefore:

If to Lessor:

570 Metro Place North Limited Partnership
C/O John Paton
P.O. BOX 729
DUBLIN, OH 43017

If to Lessee:

Netsmart Technologies, Inc.
3500 Sunrise Highway
Great River, New York, 11739

Section 8. Right of First Opportunity. Lessee shall have a right of first
opportunity ("Right Of First Opportunity") to purchase the Premises from Lessor.
Except as set forth in Section 8.4 below, in the event Lessor desires to offer
the Premises for sale to a third party:

8.1. Notice. Lessor shall promptly deliver to Lessee a notice of such desire to
offer to sell, which notice shall include, without limitation, the purchase
price and other material terms of the sale transaction (the “Offer Notice”), and
Lessee may, within ten (10) days after receipt thereof, offer to purchase the
Premises on the same terms as those set forth in the Offer Notice. If Lessee
fails to reply to the Offer Notice within the stipulated ten (10) day period,
Lessor may proceed to sell the Premises substantially in accordance with the
terms set forth in the Offer Notice (and a purchase price of not less than 95%
of the purchase price set forth in the Offer Notice), free from the Right of
First Opportunity which shall thereafter terminate and be null and void and
Lessee shall execute a written waiver and termination of the Right of First
Opportunity, but any such sale shall be subject to this Lease (except the Right
of First Opportunity).

8.2. Modified Terms. The Right of First Opportunity shall remain applicable to
an offer to purchase from a third party if the purchase price under the offer to
purchase from a third party terms is less than 95% of the purchase price in the
Offer Notice.

8.3. Conditions of Sale. If Lessee properly exercises its option to exercise the
Right of First Opportunity to purchase the Premises on the terms and conditions
set forth in the Offer Notice, then Lessor and Lessee shall promptly enter into
a formal contract for the purchase and sale of the Premises on the terms and
conditions as are contained in Offer Notice. If the Premises shall be conveyed
to Lessee under this Right of First Opportunity, any prepaid Rent shall be
apportioned and applied on account of the purchase price as of the closing date.

8.4. Limitation. The Right of First Opportunity shall not be applicable to any
sale or transfer of an interest in the Premises between existing direct or
indirect owners of Lessor or their respective families, or to entities or trusts
created, owned or controlled by one or more of such direct or indirect owners or
their families.

 
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Section 9. Effect of Amendment. Any capitalized term not otherwise defined in
this Amendment shall be assigned the meaning given to such term in the Lease.
Any provision of the Lease not modified herein shall remain in full force and
effect. The Lease, as amended hereby, is ratified and confirmed. In the event of
any conflict between the terms and conditions of the Lease and the terms and
conditions of this Amendment, the terms and conditions of this Amendment are
paramount and the Lease shall be construed accordingly.

IN WITNESS WHEREOF, the parties hereto have executed multiple counterparts of
this Amendment as of the Effective Date.

 
LESSOR:

570 Metro Place North Limited Partnership,
an Ohio limited partnership

By: Metro GP, LLC, general partner

By:                                                                        
John A. Paton, Sole Member

ASSIGNOR:

CMHC Systems, Inc., an Ohio corporation

By:                                                                        
Name:                                                                   
Title:                                                                     

LESSEE:

Netsmart Technologies, Inc., a Delaware
corporation

By:                                                                        
Name:                                                                   
Title:                                                                     

 
C-6

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STATE OF OHIO                         §
COUNTY OF FRANKLIN           §

The foregoing instrument was acknowledged before me this ____ day of _____,
2005, by John A. Paton, the sole member of Metro GP, LLC, an Ohio limited
liability company, the general partner of 570 Metro Place North Limited
Partnership, an Ohio limited partnership, on behalf of the company and the
limited partnership.

 
                                                                              
Notary Public

 
STATE OF OHIO                         §
COUNTY OF FRANKLIN           §

The foregoing instrument was acknowledged before me this ____ day of _____,
2005, by    , the       of CMHC Systems, Inc., an Ohio corporation, on behalf of
the corporation.

 
                                                                              
Notary Public

STATE OF                                   §
COUNTY OF                               §

The foregoing instrument was acknowledged before me this ____ day of _____,
2005, by    , the       of Netsmart Technologies, Inc., a Delaware corporation,
on behalf of the corporation.

 
                                                                              
Notary Public

 
 
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street, Columbus, Ohio 43215

 
C-7

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EXHIBIT A

(Attach “Lease”)

 
C-8

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EXHIBIT B

LESSOR REPAIR ITEMS

A.
Asphalt

 
1)
Remove potholed and alligatored asphalt and failed base materials; patch to
existing grade. Overlay entire surface with new 1-1/2” (i.e., 3 inches compacted
to finish thickness of 1-1/2 inches) asphalt.

2)
Repair broken asphalt curbs and seal connections to catch basins.

B.
Concrete

 
1)
Caulk shrinkage crack in exposed aggregate front plaza and dumpster slab.

2)
Replace spalled concrete in north entry walk.

C.
ADA

 
1)
Handicapped parking spaces in visitor parking areas (front) requires painting of
handicapped symbols on asphalt surfaces.

 
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