EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 18, 2006 (the "AGREEMENT"),
by and among Walnut Valley, Inc., a CORPORATION existing under the laws of
Illinois ("PURCHASER"), and Patron Systems, Inc., the selling stockholder
"Selling Stockholder."
W I T N E S S E T H:
WHEREAS, the Selling Stockholder owns an aggregate of 1000 shares of
the common stock, no par value per share (the "SHARES"), of LucidLine, Inc., an
Illinois corporation (the "COMPANY"), which constitute all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, the Selling Stockholder desire to sell to Purchaser, and
Purchaser desires to purchase from the Selling Stockholder, the Shares for the
purchase price and upon the terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
SECTION 1.1 SALE AND PURCHASE OF SHARES. Upon the terms and subject to
the conditions contained herein, on the Closing Date, the Selling Stockholder
agrees to sell to Purchaser, and Purchaser agrees to purchase from the Selling
Stockholder, the Shares.
ARTICLE II
CONSIDERATION
SECTION 2.1 CONSIDERATION. The aggregate consideration for the Shares
shall be an amount in cash equal to $50,000 (the "PURCHASE PRICE"), subject to
adjustment as provided in SECTION 2.3.
SECTION 2.2 PAYMENT OF PURCHASE PRICE. On the Closing Date, Purchaser
shall pay $25,000 of the Purchase Price to the Selling Stockholder. On the
Closing Date Purchaser execute the Promissory Note which is attached hereto
covering the remaining $25,000 which shall be due and payable 30 days after the
Closing Date.
ARTICLE III
CLOSING AND TERMINATION
SECTION 3.1 CLOSING DATE. Subject to the satisfaction of the conditions
set forth in SECTIONS 7.1 and 7.2 hereof (or the waiver thereof by the party
entitled to waive that condition), the closing of the sale and purchase of the
Shares provided for in SECTION 1.1 hereof (the "CLOSING") shall take place at
the offices of LucidLine, Inc. (or at such other place as the parties may
designate in writing) at 9:00 a.m. Chicago time on a date to be specified by the
parties. The date on which the Closing shall be held is referred to in this
Agreement as the "CLOSING DATE".
SECTION 3.2 TERMINATION OF AGREEMENT. This Agreement may be terminated
prior to the Closing as follows:
(a) At the election of the Selling Stockholder or Purchaser on
or after May 15, 2006 if the Closing shall not have occurred by the
close of business on such date, provided that the terminating party is
not in material default of any of its obligations hereunder;
(b) by mutual written consent of the Selling Stockholder and
Purchaser;
(c) by written notice from Purchaser to the Selling
Stockholder that there has been an event, change, occurrence or
circumstance that has had or could reasonably be expected to have a
Material Adverse Effect;
(d) by Selling Stockholder if there shall have been a material
breach of any representation, warranty, covenant or agreement of the
Purchaser set forth in this Agreement, which breach would give rise to
a failure of a condition set forth in SECTIONS 7.2(a), 7.2(b) and is
incapable of being cured or, if capable of being cured, shall not have
been cured within ten (10) days following receipt by the Purchaser of
notice of such breach from the Selling Stockholder; or
(e) by the Purchaser if there shall have been a material
breach of any representation, warranty, covenant or agreement of
Selling Stockholder set forth in this Agreement, which breach would
give rise to a failure of a condition set forth in SECTIONS 7.1(a) or
7.1(b) and is incapable of being cured or, if capable of being cured,
shall not have been cured within ten (10) days following receipt by
Selling Stockholder of notice of such breach from the Purchaser.
SECTION 3.3 PROCEDURE UPON TERMINATION. In the event of termination and
abandonment by Purchaser or the Selling Stockholder, or both, pursuant to
SECTION 3.2 hereof, written notice thereof shall forthwith be given to the other
party or parties, and this Agreement shall terminate, and the purchase of the
Shares hereunder shall be abandoned, without further action by Purchaser or the
Selling Stockholder.
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SECTION 3.4 EFFECT OF TERMINATION. In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to
Purchaser, the Company or the Selling Stockholder; PROVIDED, HOWEVER, that the
obligations of the parties set forth in ARTICLE IX hereof shall survive any such
termination and shall be enforceable hereunder; PROVIDED, FURTHER, HOWEVER, that
nothing in this section shall relieve Purchaser or Stockholder of any liability
for a breach of this Agreement prior to the effective date of termination.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDER
Selling Stockholder represents and warrants to the Purchaser as
follows::
SECTION 4.1 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted. The Company is duly qualified or authorized to do business as a
corporation and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing would not have a Material Adverse Effect.
SECTION 4.2 AUTHORIZATION OF AGREEMENT. The Selling Stockholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such Selling Stockholder in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "SELLING STOCKHOLDER DOCUMENTS"),
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each of the Selling Stockholder
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all required action on the part of the
Selling Stockholder. This Agreement, and each of the Selling Stockholder
Documents will be at or prior to the Closing, duly and validly executed and
delivered by Selling Stockholder and (assuming the due authorization, execution
and delivery) this Agreement constitutes, and each of the Selling Stockholder
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of the Selling Stockholder, enforceable against the Selling
Stockholder in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 4.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
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(a) None of the execution and delivery by the Selling
Stockholder of this Agreement or the Selling Stockholder Documents, the
consummation of the transactions contemplated hereby or thereby, or
compliance by the Selling Stockholder with any of the provisions hereof
or thereof will conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or give rise to any
obligation of the Company to make any payment under, any provision of
(i) the certificate of incorporation and by-laws or comparable
organizational documents of the Company; (ii) any Contract, or Permit
to which the Company is a party or by which any of the properties or
assets of the Company are bound; (iii) any Order of any Governmental
Body applicable to the Company or any of the properties or assets of
the Company as of the date hereof; or (iv) any applicable Law.
(b) None of the execution and delivery by the Selling
Stockholder of this Agreement or the Selling Stockholder Documents, the
consummation of the transactions contemplated hereby or thereby, or
compliance by the Selling Stockholder with any of the provisions hereof
or thereof will conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination or cancellation under any provision of (i)
the certificate of incorporation and by-laws or comparable
organizational documents of the Selling Stockholder; (ii) any Contract,
or Permit to which the Selling Stockholder is a party or by which any
of the properties or assets of the Selling Stockholder is bound; (iii)
any Order of any Governmental Body applicable to the Selling
Stockholder or by which any of the properties or assets of the Selling
Stockholder is bound; or (iv) any applicable Law.
(c) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of the Company
or the Selling Stockholder in connection with (i) the execution and
delivery of this Agreement or the Selling Stockholder Documents, the
compliance by the Selling Stockholder with any of the provisions
hereof, or the consummation of the transactions contemplated hereby, or
(ii) the continuing validity and effectiveness immediately following
the Closing of any Permit or Contract of the Company.
SECTION 4.4 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of common stock, no par value per share (the "COMMON
STOCK"). As of the date hereof, there are 1000 shares of Common Stock
issued and outstanding and no shares of Common Stock are held by the
Company as treasury stock. All of the issued and outstanding shares of
Common Stock were duly authorized for issuance and are validly issued,
fully paid and non-assessable.
(b) Except as set forth on SCHEDULE 4.4(B), there is no
existing option, warrant, call, right or Contract of any character to
which the Selling Stockholder or the Company is a party requiring, and
there are no securities of the Company outstanding which upon
conversion or exchange would require, the issuance, sale or transfer of
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any additional shares of capital stock or other equity securities of
the Company or other securities convertible into, exchangeable for or
evidencing the right to subscribe for or purchase shares of capital
stock or other equity securities of the Company. Neither the Selling
Stockholder nor the Company is a party to any voting trust or other
Contract with respect to the voting, redemption, sale, transfer or
other disposition of the capital stock of the Company.
SECTION 4.5 CORPORATE RECORDS.
(a) The Selling Stockholder has delivered to Purchaser true,
correct and complete copies of the certificate[s] of incorporation
(each certified by the Secretary of State or other appropriate official
of the applicable jurisdiction of organization) and by-laws (each
certified by the secretary, assistant secretary or other appropriate
officer) or comparable organizational documents of the Company.
(b) The minute books of the Company previously made available
to Purchaser contain true, correct and complete records of all meetings
and accurately reflect all other corporate action of the stockholders
and board of directors (including committees thereof) of the Company.
SECTION 4.6 OWNERSHIP AND TRANSFER OF SHARES. The Selling Stockholder
is the record and beneficial owner of the Shares free and clear of any and all
Liens. The Selling Stockholder has the power and authority to sell, transfer,
assign and deliver such Shares as provided in this Agreement, and such delivery
will convey to Purchaser good and marketable title to such Shares, free and
clear of any and all Liens.
SECTION 4.7 FINANCIAL STATEMENTS;
(a) The Selling Stockholder has delivered to Purchaser copies
of (i) the unaudited consolidated balance sheet of the Company as of
December 31, 2005, and the related unaudited consolidated statements of
income of the Company for the year then ended and (ii) the unaudited
consolidated balance sheet of the Company as of December 31, 2005 (such
unaudited statements are referred to herein as the "FINANCIAL
STATEMENTS"). Each of the Financial Statements is complete and correct
in all material respects, has been prepared in accordance with GAAP
consistently applied by the Company without modification of the
accounting principles used in the preparation thereof throughout the
periods presented and presents fairly in all material respects(1) the
consolidated financial position, results of operations of the Company
as at the dates and for the periods indicated therein. For the purposes
hereof, the unaudited consolidated balance sheet of the Company as of
December 31, 2005 is referred to as the "BALANCE SHEET" and December
31, 2005 is referred to as the "BALANCE SHEET DATE".
(b) The Company makes and keeps books, records and accounts
which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of their respective assets. The Company
maintains systems of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit the preparation of financial
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statements in conformity with GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to
any differences.
SECTION 4.8 NO UNDISCLOSED LIABILITIES. The Company has no
indebtedness, obligations or liabilities of any kind other than those (i) fully
reflected in, reserved against or otherwise described in the Balance Sheet or
the notes thereto or (ii) immaterial to the Company and incurred in the Ordinary
Course of Business since the Balance Sheet Date
SECTION 4.9 ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly
contemplated by this Agreement or as set forth on SCHEDULE 4.9, since the
Balance Sheet Date (i) the Company has conducted its business only in the
Ordinary Course of Business and (ii) there has not been any event, change,
occurrence or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect. Without limiting the generality of the foregoing,
since the Balance Sheet Date:
(a) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and
assets of the Company having a replacement cost of more than $5,000 for
any single loss or $5,000 for all such losses;
(b) there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares
of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company of any outstanding shares of capital stock
or other securities of, or other ownership interest in, the Company,
(c) the Company has not awarded or paid any bonuses to
employees of the Company with respect to the fiscal year ended December
31, 2005, except to the extent accrued on the Balance Sheet or entered
into any employment, deferred compensation, severance or similar
agreement (nor amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of the Company's
directors, officers, employees, agents or representatives or agreed to
increase the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with such directors, officers,
employees, agents or representatives;
(d) the Company has not entered into any transaction or
Contract or conducted its business other than in the Ordinary Course of
Business;
(e) the Company has not failed to promptly pay and discharge
current liabilities except where disputed in good faith by appropriate
proceedings;
(f) the Company has not mortgaged, pledged or subjected to any
Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of
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the Company except for assets acquired or sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the Ordinary Course of
Business;
SECTION 4.10 TAXES.
(a) (i) all material Tax Returns required to be filed by or on
behalf of the Company or any Affiliated Group of which the Company is
or was a member have been duly and timely filed with the appropriate
Taxing Authority in all jurisdictions in which such Tax Returns are
required to be filed (after giving effect to any valid extensions of
time in which to make such filings), and all such Tax Returns are true,
complete and correct in all [material] respects; and (ii) all Taxes
payable by or on behalf of the Company or any Affiliated Group of which
the Company is or was a member have been fully and timely paid. With
respect to any period for which Tax Returns have not yet been filed or
for which Taxes are not yet due or owing, the Company has made due and
sufficient accruals for such Taxes in the Financial Statements and its
books and records. All required estimated Tax payments sufficient to
avoid any underpayment penalties have been made by or on behalf of the
Company.
(b) The Company has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes and
has duly and timely withheld and paid over to the appropriate Taxing
Authority all amounts required to be so withheld and paid under all
applicable Laws.
(c) There are no liens as a result of any unpaid Taxes upon
any of the assets of the Company.
(d) [There is no taxable income of Company that will be
required under applicable Tax Law to be reported by the Purchaser,
including the Company or any of its Subsidiaries, for a taxable period
beginning after the Closing Date which taxable income was realized (and
reflects economic income) arising prior to the Closing Date.]
SECTION 4.11 REAL PROPERTY.
(a) SCHEDULE 4.11 (A) sets forth a complete list of (i) all
real property and interests in real property leased by the Company
(individually, a "REAL PROPERTY LEASE" and collectively, the "REAL
PROPERTY LEASES") as lessee or lessor. The Real Property Leases
constitute all interests in real property currently used or currently
held for use in connection with the business of the Company and which
are necessary for the continued operation of the business of the
Company as the business is currently conducted. All of the Company
Property, buildings, fixtures and improvements thereon owned or leased
by the Company are in good operating condition and repair (subject to
normal wear and tear). The Company has delivered or otherwise made
available to Purchaser true, correct and complete copies of all the
Real Property Leases, together with all amendments, modifications or
supplements, if any, thereto.
(b) The Company has a valid and enforceable leasehold interest
under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
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enforcement is sought in a proceeding at law or in equity). Each of the
Real Property Leases is in full force and effect, and the Company has
not received or given any notice of any default or event that with
notice or lapse of time, or both, would constitute a default by the
Company under any of the Real Property Leases.
(c) The Company has all certificates of occupancy and Permits
of any Governmental Body necessary or useful for the current use and
operation of each Company Property, and the Company has fully complied
with all material conditions of the Permits applicable to them. No
default or violation, or event that with the lapse of time or giving of
notice or both would become a default or violation, has occurred in the
due observance of any Permit.
SECTION 4.12 TANGIBLE PERSONAL PROPERTY.
(a) The Company has good and marketable title to all of the
items of tangible personal property reflected on the Balance Sheet
(except as sold or disposed of subsequent to the date thereof in the
Ordinary Course of Business), free and clear of any and all Liens,
other than the Permitted Exceptions.
(b) SCHEDULE 4.12 (b) sets forth all leases of personal
property ("PERSONAL PROPERTY LEASES") involving annual payments in
excess of $25,000 relating to personal property used in the business of
the Company to which the Company is a party or by which the properties
or assets of the Company is bound. The Company has delivered or
otherwise made available to Purchaser true, correct and complete copies
of the Personal Property Leases, together with all amendments,
modifications or supplements thereto.
SECTION 4.13 INTELLECTUAL PROPERTY
(a) SCHEDULE 4.13 (a) sets forth a list of:
(i) all United States and foreign patents and patent
applications and patent disclosures owned or controlled by the
Company; all United States and foreign copyrights, registered
or unregistered, copyrighted works and copyright registration
applications owned or controlled by the Company;
(ii) all computer software programs and software
systems (including, without limitation, all data, databases,
compilations, tool sets, related documentation and materials,
whether in source code, object code or human readable form and
regardless of media), developed by or for the Company or
otherwise used in the business ("SOFTWARE");
(iii) all United States, state and foreign
trademarks, service marks and trade names for which
registrations have been issued or applied for by the Company,
and all other United States, state and foreign trademarks,
service marks and trade names owned or used by the Company or
in which the Company holds any right, license, sublicense or
interest;
(iv) all agreements, commitments, contracts,
understandings, licenses, sublicenses, assignments and
indemnities which relate or pertain to any asset, property or
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right of the character described in the preceding clause to
which the Company is a party;
(v) all licenses, sublicenses or agreements which are
material to the business and which relate or pertain to
mailing lists, know-how, trade secrets, disclosures or uses of
ideas to which the Company is a party, showing in each case
the parties and the material terms; and
(b) All patents listed on SCHEDULE 4.13 (a) as being owned,
controlled or used by the Company are valid and in force and all patent
applications of the Company listed therein are in good standing, all
without challenge of any kind, and, except as otherwise set forth on
SCHEDULE 4.13 (a), the Company owns the entire right, title and
interest in and to such patents and patent applications, free and clear
of all Encumbrances, except Permitted Encumbrances. All of the
registrations for trademarks, service marks, trade names and copyrights
listed on SCHEDULE 4.13 (a) as being owned, controlled or used by the
Company are valid and in force and all applications for such
registrations are pending and in good standing, all without challenge
of any kind, and, except as otherwise set forth on SCHEDULE 4.13 (a),
the Company owns the entire right, title and interest in and to all
such trademarks, service marks, trade names and copyrights so listed as
well as the registrations and applications for registration therefore,
free and clear of all Encumbrances, except Permitted Encumbrances.
Correct and complete copies of all the patents and patent applications
and of all of the trademarks, service marks, trade names and copyrights
and registrations, applications or deposits therefore and all the
agreements, commitments, contracts, understandings, licenses,
sublicenses, assignments, and indemnities listed on SCHEDULE 4.13(a)
have heretofore been delivered or otherwise made available by the
Company to Purchaser.
SECTION 4.14 MATERIAL CONTRACTS.
(a) SCHEDULE 4.14 sets forth all of the following Contracts to
which the Company or any of its Subsidiaries is a party or by which it
is bound (collectively, the "MATERIAL CONTRACTS"):
(i) Contracts with any current or former officer,
director, stockholder of the Company;
(ii) Contracts for the sale of any of the assets of
the Company other than in the Ordinary Course of Business or
for the grant to any person of any preferential rights to
purchase any of its assets;
(iii) Contracts for joint ventures, strategic
alliances or partnerships;
(iv) Contracts containing covenants of the Company
not to compete in any line of business or with any person in
any geographical area or covenants of any other person not to
compete with the Company in any line of business or in any
geographical area;
(v) Contracts relating to the acquisition by the
Company of any operating business or the capital stock of any
other person;
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(vi) Contracts relating to the incurrence, assumption
or guarantee of any Indebtedness or imposing a Lien on any of
its assets;
(vii) Contracts under which the Company has made
advances or loans to any other Person; or
(viii) Contracts providing for severance, retention,
change in control or other similar payments;
(ix) Contracts for the employment of any individual
on a full-time, part-time or consulting or other basis
providing annual compensation in excess of $100,000;
(x) Contracts for the provision of goods or services
involving consideration in excess of $25,000 annually or
$25,000 in the aggregate over the term of the Contract;
(xi) outstanding agreements of guaranty, surety or
indemnification, direct or indirect, by the Company;
(xii) Contracts (or group of related contracts) which
involve the expenditure of more than $25,000 annually or
$25,000 in the aggregate or require performance by any party
more than one year from the date hereof; and
(xiii) Contracts that are otherwise material to the
Company.
Each of the Material Contracts is in full force and effect and is
legal,
SECTION 4.16 COMPLIANCE WITH LAWS; PERMITS.
(a) The Company is in compliance in all material respects with
all Laws of any Governmental Body applicable to its business,
operations or assets.
(b) SCHEDULE 4.16 (b) contains a list of all Permits which are
required for the operation of the business of the Company as presently
conducted and as presently intended to be conducted. The Company and
its Subsidiaries currently have all Permits which are required for the
operation of their respective businesses as presently conducted.
SECTION 4.17 INSURANCE. The Company has insurance policies in full
force and effect for such amounts as are sufficient for all requirements of Law
and all agreements to which the Company is a party or by which it is bound. Set
forth in SCHEDULE 4.17 is a list
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of all insurance policies and all fidelity bonds held by or applicable to the
Company setting forth, in respect of each such policy, the policy name, policy
number, carrier, term, type and amount of coverage and annual premium. Except as
noted on SCHEDULE 4.17, all such insurance will remain in full force and effect
immediately following the consummation of the transactions contemplated hereby.
SECTION 4.18 ACCOUNTS AND NOTES RECEIVABLE AND PAYABLE.
(a) All accounts and notes receivable of the Company have
arisen from bona fide transactions in the Ordinary Course of Business
consistent with past practice and are payable on ordinary trade terms.
All accounts and notes receivable of the Company reflected on the
Balance Sheet are good and collectible at the aggregate recorded
amounts thereof, net of any applicable reserve for returns or doubtful
accounts reflected thereon, which reserves are adequate and were
calculated in a manner consistent with past practice and in accordance
with GAAP consistently applied. All accounts and notes receivable
arising after the Balance Sheet Date are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserve for
returns or doubtful accounts, which reserves are adequate and were
calculated in a manner consistent with past practice and in accordance
with GAAP consistently applied. None of the accounts or the notes
receivable of the Company (i) are subject to any setoffs or
counterclaims or (ii) represent obligations for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any
other repurchase or return arrangement.
(b) All accounts payable of the Company reflected in the
Balance Sheet or arising after the date thereof are the result of bona
fide transactions in the Ordinary Course of Business and have been paid
or are not yet due and payable.
SECTION 4.19 BANKS. SCHEDULE 4.19 contains a complete and correct list
of the names and locations of all banks in which Company or any Subsidiary has
accounts or safe deposit boxes and the names of all persons authorized to draw
thereon or to have access thereto. Except as set forth on SCHEDULE 4.19, no
person holds a power of attorney to act on behalf of the Company or any
Subsidiary.
SECTION 4.20 FULL DISCLOSURE. This Agreement and the Selling
Stockholder Documents and their respective schedules and exhibits delivered by
or on behalf of the Selling Stockholders hereunder and thereunder are true,
correct and complete in all material respects.
SECTION 4.21 FINANCIAL ADVISORS. Except as set forth on SCHEDULE 4.21,
no Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Selling Stockholder or the Company in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
SECTION 4.22 LITIGATION There are no legal proceedings pending or, to
the Knowledge of Selling Stockholder, threatened that are reasonably likely to
prohibit or restrain the ability of Selling Stockholder to enter into this
Agreement or consummate the transactions contemplated hereby.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Selling Stockholders
that:
SECTION 5.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois and has all requisite corporate power and authority to own,
lease and operate properties and carry on its business.
SECTION 5.2 AUTHORIZATION OF AGREEMENT. Purchaser has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by Purchaser in connection with the consummation of the
transactions contemplated hereby and thereby (the "PURCHASER DOCUMENTS"), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary corporate action on behalf
of Purchaser. This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly executed and delivered by Purchaser and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
SECTION 5.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
Except as set forth on SCHEDULE 6.3 hereto, neither of the
execution and delivery by Purchaser of this Agreement and of the
Purchaser Documents, nor the compliance by Purchaser with any of the
provisions hereof or thereof will (i) conflict with, or result in the
breach of, any provision of the certificate of incorporation or by-laws
of Purchaser, (ii) conflict with, violate, result in the breach of, or
constitute a default under any note, bond, mortgage, indenture,
license, agreement or other obligation to which Purchaser is a party or
by which Purchaser or its properties or assets are bound or (iii)
violate any statute, rule, regulation or Order of any Governmental Body
by which Purchaser is bound, except, in the case of clauses (ii) and
(iii), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a material adverse effect on the
ability of Purchaser to consummate the transactions contemplated by
this Agreement.
No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Purchaser in connection
with the execution and delivery of this Agreement or the Purchaser
Documents or the compliance by Purchaser with any of the provisions
hereof or thereof.
SECTION 5.4 LITIGATION. There are no legal proceedings pending or, to
the Knowledge of Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
SECTION 5.5 INVESTMENT INTENTION. Purchaser is acquiring the Shares for
its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "SECURITIES ACT") thereof. Purchaser understands that the
Shares have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available.
SECTION 5.6 FINANCIAL ADVISORS. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for Purchaser in connection
with the transactions contemplated by this Agreement and no Person is entitled
to any fee or commission or like payment in respect thereof.
12
ARTICLE VI
COVENANTS
SECTION 6.1 ACCESS TO INFORMATION. The Selling Stockholder agrees that,
prior to the Closing Date, Purchaser shall be entitled, through its officers,
employees and representatives (including, without limitation, its legal advisors
and accountants), to make such investigation of the properties, businesses and
operations of the Company and such examination of the books, records and
financial condition of the Company as it reasonably requests and to make
extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Selling Stockholder shall cooperate, and shall
cause the Company to cooperate, fully therein.
SECTION 6.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING.
Except as otherwise expressly provided in this Agreement or
with the prior written consent of Purchaser, the Selling Stockholder
shall, and shall cause the Company and its Subsidiaries to:
(a) conduct the respective businesses of the Company and its
Subsidiaries only in the Ordinary Course of Business;
(b) use its best efforts to (A) preserve its present business
operations, organization (including, without limitation, management and
the sales force) and goodwill of the Company and (B) preserve its
present relationship with Persons having business dealings with the
Company (including, without limitation, customers and suppliers);
13
(c) maintain (A) all of the assets and properties of the
Company in their current condition, ordinary wear and tear excepted and
(B) insurance upon all of the properties and assets of the Company such
amounts and of such kinds comparable to that in effect on the date of
this Agreement;
(d) (A) maintain the books, accounts and records of the
Company in the Ordinary Course of Business, (B) continue to collect
accounts receivable and pay accounts payable utilizing normal
procedures and without discounting or accelerating payment of such
accounts, and (C) comply with all contractual and other obligations
applicable to the operation of the Company.
SECTION 6.3 CONSENTS. The Selling Stockholder shall use (and shall
cause the Company to use) its best efforts, and Purchaser shall cooperate with
the Selling Stockholder, to obtain at the earliest practicable date all consents
and approvals required to consummate the transactions contemplated by this
Agreement.
SECTION 6.4 FURTHER ASSURANCES. Each of the Selling Stockholder and
Purchaser shall use its commercially reasonable efforts to cause the Company to
(i) take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.
SECTION 6.5 PRESERVATION OF RECORDS. The Selling Stockholder and
Purchaser agree that each of them shall (and shall cause the Company to)
preserve and keep the records held by them relating to the respective businesses
of the Company including all Tax Returns and the supporting documents for a
period of seven [(7) years] from the Closing Date and shall make such records
and personnel available to the other as may be reasonably required by such party
in connection with, among other things, any insurance claims by, legal
proceedings against or governmental investigations of the Selling Stockholder,
the Company, or Purchaser or any of their Affiliates or in order to enable the
Selling Stockholder or Purchaser to comply with their respective obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby or thereby.
SECTION 6.6 PUBLICITY.
(a) Neither the Selling Stockholder or Purchaser shall (and
the Selling Stockholder shall cause the Company not to) issue any press
release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written
approval of the other party hereto, which approval will not be
unreasonably withheld or delayed, unless, in the sole judgment of
Purchaser or the Selling Stockholder, disclosure is otherwise required
by applicable Law or by the applicable rules of any stock exchange on
which the Selling Stockholder lists securities, provided that, to the
extent required by applicable Law, the party intending to make such
release shall use its best efforts consistent with such applicable Law
to consult with the other party with respect to the text thereof.
14
(b) Each of Purchaser, the Company and the Selling Stockholder
agrees that the terms of this Agreement shall not be disclosed or
otherwise made available to the public and that copies of this
Agreement shall not be publicly filed or otherwise made available to
the public, except where such disclosure, availability or filing is
required by applicable Law and only to the extent required by such Law.
SECTION 6.7 USE OF NAME. The Selling Stockholder hereby agrees that
upon the consummation of the transactions contemplated hereby, Purchaser and the
Company shall have the sole right to the use of the name "LucidLine"or similar
names any service marks, trademarks, trade names, identifying symbols, logos,
emblems, signs or insignia related thereto or containing or comprising the
foregoing, including any name or xxxx confusingly similar thereto (collectively,
the "COMPANY MARKS"). The Selling Stockholder shall not, and shall not permit
their respective Affiliates to, use such name or any variation or simulation
thereof or any of the Company Marks. The Selling Stockholder shall, and shall
cause each its their respective Affiliates to, immediately after the Closing,
cease to hold itself out as having any affiliation with the Company or any of
its Affiliates.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by Purchaser
in whole or in part to the extent permitted by applicable Law):
(a) the representations and warranties of the Selling
Stockholders shall be true and correct as of the date of this Agreement
and as of the Closing as though made at and as of the Closing, except
to the extent such representations and warranties expressly relate to
an earlier date (in which case such representations and warranties
shall be true and correct on and as of such earlier date);
(b) the Selling Stockholder shall have performed and complied
in all material respects with all obligations and agreements required
in this Agreement to be performed or complied with by them prior to the
Closing Date;
(c) there shall not have been or occurred any event, change,
occurrence or circumstance that has had a Material Adverse Effect since
the Balance Sheet Date;
(d) no Legal Proceeding shall have been instituted or
threatened or claim or demand made against the Selling Stockholder, the
Company or, or Purchaser seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the
transactions contemplated hereby, and there shall not be in effect any
Order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby.
15
(e) Purchaser shall have received the written resignations of
each of the directors of the Company;
SECTION 7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING
STOCKHOLDER. The obligations of the Selling Stockholder to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions (any or all
of which may be waived by the Selling Stockholder in whole or in part to the
extent permitted by applicable Law):
(a) the representations and warranties of Purchaser set forth
in this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing as though made at and as of the
Closing, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties shall be true and correct in all material respects, on
and as of such earlier date);
(b) Purchaser shall have performed and complied in all
respects with all obligations and agreements required by this Agreement
to be performed or complied with by Purchaser on or prior to the
Closing Date;
(c) there shall not be in effect any Order by a Governmental
Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;
(d) Purchaser shall have delivered, or caused to be delivered,
to the Selling Stockholders the payment of the Purchase Price in
accordance with Section 2.2 hereof.
ARTICLE VIII
TAX MATTERS
SECTION 8.1 FILING OF TAX RETURNS; PAYMENT OF TAXES.
(a) The Selling Stockholder shall include the Company, or
cause the Company to be included in, and shall file or cause to be
filed, (A) the United States consolidated federal income Tax Returns of
the Selling Stockholder or its Affiliates for the taxable periods of
the Company ending on or prior to the Closing Date and (B) where
applicable, all other Consolidated Tax Returns of Selling Stockholder
for the taxable periods of the Company ending on or prior to the
Closing Date, and shall pay any and all Taxes due with respect to the
returns referred to in clause (A) or (B). The Selling Stockholder shall
also cause the Company to timely file all other Tax Returns of or which
include the taxes required to be filed by the Company on or prior to
the Closing Date and shall pay or cause to be paid all Taxes shown due
thereon. All Tax Returns described in this section shall be prepared in
a manner consistent with prior practice. The Selling Stockholder shall
provide Purchaser with the portion of the such Tax Returns relating to
the Company at least twenty (20) days prior to the due date for filing
thereof, along with supporting workpapers, for Purchaser's review.
16
(b) Following the Closing, Purchaser shall cause to be timely
filed all Tax Returns (other than those Tax Returns described in
SECTION 8.1 (a) required to be filed by the Company after the Closing
Date and, pay or cause to be paid all Taxes shown due thereon. The
Purchaser shall provide the Selling Stockholder with the tax returns
related to the Company at least (20) days prior to the due date for
filing thereof, along with supporting workpapers, for the Selling
Stockholder's review. The Selling Stockholder and Purchaser shall
attempt in good faith to resolve any disagreements regarding such Tax
Returns prior to the due date for filing.
(c) Not later than ten (10) days prior to the due date for the
payment of Taxes on any Tax Returns which Purchaser has the
responsibility to cause to be filed pursuant to SECTION 8.1(b), the
Selling Stockholder shall pay to Purchaser the amount of Taxes, if any,
which is owed by the Selling Stockholder as mutually agreed by Selling
Stockholder and Purchaser.
(d) STRADDLE PERIOD TAX ALLOCATION. The Selling Stockholder
and Purchaser will, unless prohibited by applicable law, close the
taxable period of the Company as of the close of business on the
Closing Date. If applicable law does not permit the Company to close
its taxable year on the Closing Date or in any case in which a Tax is
assessed with respect to a taxable period which includes the Closing
Date (but does not begin or end on that day) (a "STRADDLE PERIOD"), the
Taxes, if any, attributable to a Straddle Period shall be allocated (i)
to the Selling Stockholder for the period up to and including the close
of business on the Closing Date, and (ii) to Purchaser for the period
subsequent to the Closing Date. Any allocation of income or deductions
required to determine any Taxes attributable to a Straddle Period shall
be made by means of a closing of the books and records of the Company
as of the close of the Closing Date, provided that exemptions,
allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization
deductions) shall be allocated between the period ending on the Closing
Date and the period after the Closing Date in proportion to the number
of days in each such period.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 EXPENSES. Each party shall bear its own expenses and fees
and commissions (including, but not limited to, all compensation and expenses of
counsel, consultants and accountants) incurred in connection with its
preparation, negotiation and execution of the Transaction Documents and
consummation of the transactions contemplated hereby or thereby.
SECTION 9.2 NOTICES. All notices required or permitted to be given
under this Agreement (and, unless otherwise expressly provided therein, under
any document delivered pursuant to this Agreement) shall be given in writing and
shall be deemed received (i) when personally delivered to the relevant party at
17
such party's address as set forth below, (ii) if sent by mail (which must be
certified or registered mail, postage prepaid) or overnight courier, when
received or rejected by the relevant party at such party's address indicated
below, or (iii) if sent by facsimile, when confirmation of delivery is received
by the sending party:
If to the Purchaser:
Walnut Valley, Inc. d.b.a. CY Solutions
00000 X. Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx, President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Selling Stockholder:
Patron Systems, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Each party hereto may change its address or facsimile number for purposes of
this Section 9.2 by providing notice to the other parties in accordance with
this Section 9.2.
SECTION 9.3 INTERPRETATION. The article and section headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
SECTION 9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument; and shall become binding
when two or more counterparts have been signed by each of the parties hereto and
delivered to each of Purchaser and Selling Stockholder.
SECTION 9.5 AMENDMENT. This Agreement may not be amended, modified or
supplemented except by a writing signed by an authorized representative of each
of the parties hereto.
SECTION 9.8 ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits attached hereto and the documents delivered pursuant hereto)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
SECTION 9.9 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
18
SECTION 9.10 SEVERABILITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective in the jurisdiction involved to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid, illegal or
unenforceable provision or provisions or any other provisions hereof, unless
such a construction would be unreasonable.
SECTION 9.11 WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
SECTION 9.12 CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other parties during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other parties all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, to their counsel, accountants, financial advisors,
shareholders or lenders). No other party shall use any confidential information
in any manner whatsoever; PROVIDED, HOWEVER, that after the Effective Time, the
Purchaser may use or disclose any confidential information included in the
assets of the Company as of the Effective Time or otherwise reasonably related
to the assets or business of the Company. The obligation of each party to treat
such documents, materials and other information in confidence shall not apply to
any information which (i) is or becomes available to such party from a source
other than such party, (ii) is or becomes available to the public other than as
a result of disclosure by such party or its agents, (iii) is required to be
disclosed under applicable law or judicial process, but only to the extent it
must be disclosed, or (iv) such party reasonably deems necessary to disclose to
obtain any of the consents or approvals contemplated hereby.
SECTION 9.13 GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by and construed in accordance with the internal laws (as opposed to
the conflicts of law provisions) of the State of Delaware.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or its breach, interpretation, termination
19
or validity, including any question whether a matter is subject to
arbitration hereunder, is referred to herein as a "DISPUTE."
(b) If the parties fail to settle any Dispute within 30 days
after any party has given notice to the other parties hereto of the
claimed existence of a Dispute, the Dispute shall be resolved by a
confidential, binding arbitration. All such Disputes shall be
arbitrated in Chicago, Illinois pursuant to the arbitration rules and
procedures of J.A.M.S. Endispute before an arbitrator or arbitrators
selected in the manner provided in such rules and procedures, except
that the "Final Offer (or Baseball)" Arbitration Option shall not be
used unless otherwise agreed in writing. As a condition to JAMS'
jurisdiction, the parties shall be entitled to conduct discovery
pursuant to the Federal Rules of Civil Procedure.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction, and each party hereto
consents and submits to the jurisdiction of such court for purposes of
such action. The statute of limitations, estoppel, waiver, laches and
similar doctrines, which would otherwise be applicable in any action
brought by a party, shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed to be
the commencement of an action for those purposes. The Federal
Arbitration Act shall apply to the construction, interpretation and
enforcement of this arbitration provision. Each party shall bear its
own expenses (including, without limitation, the fees and expenses of
legal counsel and accountants) in connection with such arbitration, and
Purchaser and the Selling Stockholder shall each bear one-half of the
arbitrators' fees and expenses.
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
specified in this Article:
"AFFILIATE" means, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
Person, and the term "control" (including the terms "controlled by" and
"under common control with") 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 ownership of
voting securities, by contract or otherwise.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Section 1504 of the Code or any comparable or analogous
group under state, local or foreign Law.
"CONTRACT" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, commitment or other arrangement or
agreement, whether written or oral.
20
"GOVERNMENTAL BODY" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether
federal, state, local or foreign, or any agency, instrumentality or
authority thereof, or any court or arbitrator (public or private).
"LIEN" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, proxy, voting trust or agreement,
transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
on the historical, near-term or long-term projected business, assets,
properties, results of operations, condition (financial or otherwise)
or prospects of the Company or its Subsidiaries, (ii) a material
adverse effect on the financial, banking, capital markets or general
economic conditions, (iii) a material adverse effect on the value of
the Company or its Subsidiaries, (iv) changes in general economic,
regulatory or political conditions, or securities markets in the United
States or worldwide or any outbreak of hostilities, terrorist
activities or war, or any material worsening of any such hostilities,
activities or war underway as of the date hereof or (v) a material
adverse effect on the ability of the Selling Stockholders to consummate
the transactions contemplated by this Agreement or perform their
obligations under this Agreement or the Selling Stockholder Documents.
A Material Adverse Effect shall be determined in light of Purchaser's
intended capital structure for the transactions contemplated by this
Agreement.
"ORDINARY COURSE OF BUSINESS" means the ordinary and usual
course of day-to-day operations of the business through the date hereof
consistent with past practice.
"PERMITS" means any approvals, authorizations, consents,
licenses, permits or certificates of a Governmental Body.
"PERMITTED EXCEPTIONS" means (i) statutory liens for current
Taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve is established
therefor; (ii) mechanics', carriers', workers', repairers' and similar
Liens arising or incurred in the Ordinary Course of Business that are
not material to the business, operations and financial condition of the
Company Property so encumbered and that are not resulting from a
breach, default or violation by the Company or any of its Subsidiaries
of any Contract or Law.
"TAXES" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any
kind whatsoever, (ii) all interest, penalties, fines, additions to tax
or additional amounts imposed by any Taxing Authority in connection
with any item described in clause (i) and (iii) any transferee
21
liability in respect of any items described in clauses (i) and/or (ii)
payable by reason of contract, assumption, transferee liability,
operation of Law, Treasury Regulation Section 1.1502-6(a) (or any
predecessor or successor thereof of any analogous or similar provision
under Law) or otherwise.
"TAXING AUTHORITY" means the IRS or any other Governmental
Body responsible for the administration of any Tax.
"TAX RETURN" means any return, report or statement required to
be filed with respect to any Tax (including any attachments thereto,
and any amendment thereof) including, but not limited to, any
information return, claim for refund, amended return or declaration of
estimated Tax, and including, where permitted or required, combined,
consolidated or unitary returns for any group of entities that includes
the Company, any of its Subsidiaries, or any of their Affiliates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
PURCHASER, CY Solutions
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: President
SELLING STOCKHOLDER, Patron
Systems, Inc:
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CFO
22
SCHEDULES
4.4 (b) Options, Warrants, Calls, Rights, or Contracts Impacting Shares
4.9 Material Adverse Effects
4.11 (a) Real Property Leases
4.12 (b) Personal Property Leases
4.13 (a) Intellectual Property
4.14 (a) Material Contracts
4.16 (b) Permits
4.17 Insurance Policies
4.19 Banks
4.21 Financial Advisors
5.3 Purchaser Conflicts Including Required Consents of Third Parties
SCHEDULE 4.4 (b) OPTIONS, WARRANTS, CALLS, RIGHTS, OR CONTRACTS
IMPACTING SHARES
NONE
SCHEDULE 4.9 MATERIAL ADVERSE EFFECTS
NONE
SCHEDULE 4.11 (A) REAL PROPERTY LEASES
Xxxxx Realty lease for 0000 X. Xxxxxxx Xxxxx, Xxxxx Xxxxxxx, XX.
Xxxxx Xxxxxxx lease for 000 X. 00xx Xxxxx, Xxxxx X. Xxxxxxxxxxxx, XX.
SCHEDULE 4.12 (B) PERSONAL PROPERTY LEASES
NONE
SCHEDULE 4.13 (A) INTELLECTUAL PROPERTY
LucidLine, Xxx.xxxx
LucidLine logo
Various computer software for personal computers, servers, network
devices, switches, routers, etc.
SCHEDULE 4.14 (A) MATERIAL CONTRACTS
(i) None
(ii) None
(iii) None
(iv) None
(v) None
(vi) None
(vii) None
(viii) None
(ix) None
(x) Business Services Link LLC; UAIG; Tech Credit Union
(xi) None
(xii) SBC Sonet Service Agreement and associated other SBC circuits
Equinix Operating Agreement Internap Network Services
Access2Go
SCHEDULE 4.16 (b) PERMITS
NONE
SCHEDULE 4.17 INSURANCE POLICIES
No insurance policies are in force specifically for LucidLine, Inc. All
policies in force cover Patron Systems, Inc. and its subsidiaries.
Thus, following the sale of LucidLine, Inc. there will be no insurance
policies in force covering LucidLine, Inc.
SCHEDULE 4.19 BANKS
NONE
SCHEDULE 4.21 FINANCIAL ADVISORS
NONE
SCHEDULE 5.3 PURCHASER CONFLICTS INCLUDING REQUIRED CONSENT OF THIRD
PARTIES
NONE
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