EXHIBIT 10
SHARE EXCHANGE AGREEMENT
DATED AS OF SEPTEMBER 27, 2002
AMONG
COMBINED PROFESSIONAL SERVICES, INC.,
PATRON SYSTEMS, INC.
and
THE PATRON STOCKHOLDERS
(as defined herein)
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.......................................................................................................1
Section 1.1. Definitions......................................................................................1
ARTICLE II
EXCHANGE..........................................................................................................3
Section 2.1. Exchange of Patron Stock.........................................................................3
Section 2.2. The Closing......................................................................................3
Section 2.3. Deliveries by the Company at the Closing.........................................................3
Section 2.4. Deliveries by the Patron Stockholders at the Closing.............................................4
Section 2.5. Deliveries by Patron at the Closing..............................................................4
ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF PATRON AND THE PATRON STOCKHOLDERS...............................................5
Section 3.1. Exchange by Other Patron Stockholders; Cancellation of Shares Held by Spanier....................5
Section 3.2. Accuracy of Representations and Warranties.......................................................5
Section 3.3. Performance......................................................................................5
Section 3.4. Approval.........................................................................................5
Section 3.5. Opinion of Company's Counsel.....................................................................5
Section 3.6. Articles of Incorporation........................................................................6
Section 3.7. Shareholder Notification.........................................................................6
Section 3.8. Due Diligence....................................................................................6
Section 3.9. No Restraint.....................................................................................6
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY......................................................................6
Section 4.1. Exchange by the Patron Stockholders..............................................................6
Section 4.2. Accuracy of Representations and Warranties.......................................................6
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................................................6
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Section 5.1. Organization and Standing........................................................................6
Section 5.2. Corporate Power..................................................................................7
Section 5.3. Capitalization...................................................................................7
Section 5.4. Subsidiaries.....................................................................................7
Section 5.5. Authorization....................................................................................7
Section 5.6. No Violation; Consents...........................................................................7
Section 5.7. Securities Laws Compliance.......................................................................8
Section 5.8. Litigation.......................................................................................8
Section 5.9. Employees........................................................................................8
Section 5.10. Brokers or Finders; Other Offers................................................................8
Section 5.11. Disclosure......................................................................................8
Section 5.12. Agreements; Action..............................................................................9
Section 5.13. Tax Returns and Payments........................................................................9
Section 5.14. Intellectual Property...........................................................................9
Section 5.15. Registration Rights.............................................................................9
Section 5.16. Anti-Dilution and Other Shares..................................................................9
Section 5.17. Real Property...................................................................................9
Section 5.18. OTC Listing....................................................................................10
Section 5.19. SEC Documents..................................................................................10
Section 5.20. Issuance of Shares.............................................................................10
Section 5.21. Liabilities....................................................................................10
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PATRON STOCKHOLDERS........................................................10
Section 6.1. Title; Authority; Enforceability................................................................11
Section 6.2. No Conflicts; Consents..........................................................................11
Section 6.3. Patron Stockholder Acknowledgements.............................................................11
ARTICLE VII
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF PATRON.............................................................12
Section 7.1. Organization and Standing; Articles and Bylaws..................................................12
Section 7.2. Corporate Power.................................................................................13
Section 7.3. Capitalization..................................................................................13
Section 7.4. Subsidiaries....................................................................................13
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Section 7.5. Authorization..................................................................................13
Section 7.6. No Violation; Consents.........................................................................13
Section 7.7. Litigation.....................................................................................14
Section 7.8. Employees......................................................................................14
Section 7.9. Brokers or Finders; Other Offers...............................................................14
Section 7.10. Disclosure.....................................................................................14
Section 7.11. Agreements; Action.............................................................................14
Section 7.12. Tax Returns and Payments.......................................................................15
Section 7.13. Intellectual Property..........................................................................15
Section 7.14. Registration Rights............................................................................15
Section 7.15. Anti-Dilution and Other Shares.................................................................15
Section 7.16. Real Property..................................................................................15
ARTICLE VIII
SPECIAL COVENANTS................................................................................................15
Section 8.1. Activities of the Company.......................................................................15
Section 8.2. Access to Properties and Records................................................................16
Section 8.3. New Board of Directors and Officers.............................................................17
Section 8.4. Information Statement...........................................................................17
Section 8.5. Public Announcements............................................................................17
ARTICLE IX
MISCELLANEOUS....................................................................................................17
Section 9.1. Termination.....................................................................................17
Section 9.2. Effect of Termination...........................................................................18
Section 9.3. Notices.........................................................................................18
Section 9.4. Fees and Expenses...............................................................................19
Section 9.5. Specific Performance............................................................................19
Section 9.6. Entire Agreement; Waivers and Amendments........................................................19
Section 9.7. Assignment; Binding Effect......................................................................19
Section 9.8. Severability....................................................................................19
Section 9.9. No Third Party Beneficiaries....................................................................20
Section 9.10. Governing Law...................................................................................20
Section 9.11. Interpretation..................................................................................20
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Section 9.12. Captions.......................................................................................20
Section 9.13. Counterparts...................................................................................20
EXHIBITS
Exhibit A Articles of Incorporation of the Company
SCHEDULES
Schedule A Patron Stockholders
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SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT (this "AGREEMENT") dated as of
September 27, 2002 among Combined Professional Services, Inc., a Nevada
corporation (the "COMPANY"), Patron Systems, Inc., a Delaware corporation
("PATRON"), and the holders of the outstanding capital stock of Patron
identified on SCHEDULE A hereto (the "PATRON STOCKHOLDERS").
WHEREAS, the Company is a Nevada corporation having an
authorized capital of 50,000,000 shares of common stock, par value $0.001 per
share ("COMPANY COMMON STOCK"), of which 6,687,200 shares have been issued and
are outstanding;
WHEREAS, Patron is a Delaware corporation having an authorized
capital of 50,000,000 shares of common stock, par value $0.01 per share ("PATRON
COMMON STOCK"), of which 29,400,000 shares have been issued and are outstanding,
and 10,000,000 shares of preferred stock, par value $0.01 per share ("PATRON
PREFERRED STOCK"), none of which have been issued or are outstanding;
WHEREAS, the respective boards of directors of the Company and
Patron have approved the exchange of shares of Patron Common Stock for shares of
Company Common Stock pursuant to the terms of this Agreement (the "SHARE
EXCHANGE"), such that, immediately following the Share Exchange, the Patron
Stockholders shall hold approximately ninety percent (90%) of the outstanding
capital stock of the Company; and
WHEREAS, the Share Exchange is intended to qualify as a
tax-free contribution under Section 351 of the Internal Revenue Code of 1986, as
amended, BUT NO OPINION OF COUNSEL OR INTERNAL REVENUE SERVICE DETERMINATION IS
BEING OBTAINED FOR SUCH TREATMENT AND IT IS NOT A CONDITION TO CLOSING.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms when used in this
Agreement shall have the following respective meanings:
"5% SHAREHOLDERS" has the meaning set forth in SECTION 5.3.
"AGREEMENT" has the meaning set forth in the first paragraph
of this Agreement.
"APPLICABLE LAW" means, with respect to any Person, any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
Governmental Authority to which such person or any of its subsidiaries is bound
or to which any of their respective properties is subject.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York are required or authorized by
law to be closed.
"CLOSING" has the meaning set forth in SECTION 2.2.
"CLOSING DATE" has the meaning set forth in SECTION 2.2.
"COMPANY" has the meaning set forth in the first paragraph of
this Agreement.
"COMPANY COMMON STOCK" has the meaning set forth in the
Recitals.
"COMPANY MATERIAL ADVERSE EFFECT" has the meaning set forth in
SECTION 5.1.
"ESCROW AGREEMENT" has the meaning set forth in SECTION 2.1.
"ESCROW SHARES" has the meaning set forth in SECTION 2.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"EXCHANGE SHARES" means the shares of Company Common Stock
issued by the Company to the Patron Stockholders pursuant to the terms of this
Agreement.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or
foreign governmental or regulatory authority.
"LIEN OR ENCUMBRANCE" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right, easement, servitude,
transfer limit, restriction, title defect or other encumbrance.
"PATRON" has the meaning set forth in the first paragraph of
this Agreement.
"PATRON COMMON STOCK" has the meaning set forth in the
Recitals.
"PATRON COMMON STOCK CERTIFICATES" has the meaning set forth
in SECTION 2.4.
"PATRON STOCKHOLDERS" has the meaning set forth in the first
paragraph of this Agreement.
"PERMITTED LIEN" means: (i) liens for taxes and other
governmental charges and assessments arising in the ordinary course of business
which are not yet due and payable, (ii) liens of landlords and liens of
carriers, warehousemen, mechanics and materialmen and other like liens arising
in the ordinary course of business for sums not yet due and payable and (iii)
other liens or imperfections on property which are not material in amount, do
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not interfere with, and are not violated by, the consummation of the
transactions contemplated by this Agreement, and do not impair the marketability
of, or materially detract from the value of or materially impair the existing
use of, the property affected by such lien or imperfection.
"PERSON" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization, Governmental Authority or other
entity or organization.
"SEC" means the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" has the meaning set forth in SECTION 5.19.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"SHARE EXCHANGE" has the meaning set forth in the Recitals, as
more specifically set forth in SECTION 2.1.
ARTICLE II
EXCHANGE
SECTION 2.1. EXCHANGE OF PATRON STOCK. Upon the terms and subject to
the conditions set forth in this Agreement, the Company and the Patron
Stockholders agree to exchange (the "SHARE EXCHANGE"), on the Closing Date, the
outstanding shares of Patron Common Stock for shares of Company Common Stock at
an exchange ratio of one (1) share of Company Common Stock for one (1) share of
Patron Common Stock owned by each Patron Stockholder, such that each Patron
Stockholder shall receive that number of shares of Company Common Stock set
forth next to such holder's name on SCHEDULE A hereto. In addition, the Company
agrees to place an aggregate of 11,000,000 shares of Company Common Stock in
escrow (the "ESCROW SHARES"), with an escrow agent mutually agreeable to the
parties hereto, pursuant to an escrow agreement (the "ESCROW AGREEMENT") in a
form mutually agreeable to the parties hereto, WHICH ESCROW SHARES ARE INTENDED
TO BE ISSUED IN CONNECTION WITH PATRON'S PROPOSED ACQUISITIONS.
SECTION 2.2. THE CLOSING. The closing (the "CLOSING") of the Share
Exchange shall take place on the third Business Day following the fulfillment or
waiver of the closing conditions set forth in ARTICLES III and IV, or on such
other date and at such other time and place as the parties hereto shall agree in
writing. The date and time at which the Closing occurs is referred to herein as
the "CLOSING DATE."
SECTION 2.3. DELIVERIES BY THE COMPANY AT THE CLOSING. At the Closing,
the Company shall issue and deliver all of the following:
(a) To each Patron Stockholder, certificate(s) representing,
in the aggregate, that number of shares of Company Common Stock as set forth
next to such Patron Stockholder's name on SCHEDULE A in definitive form and
registered in the name of such Patron Stockholder or its nominee or designee and
in such denominations as each Patron Stockholder shall request in writing at
least two (2) Business Days prior to the Closing Date.
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(b) The certificate contemplated by SECTION 3.3.
(c) A certificate of good standing from the Nevada Secretary
of State, issued as of a date within two Business Days prior to the Closing
Date, certifying that the Company is in good standing as a corporation in the
State of Nevada.
(d) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of the Company executing this
Agreement and any other document delivered pursuant hereto on behalf of the
Company.
(e) Copies of the resolutions or consents of the Company's
board of directors authorizing the execution and performance of this Agreement
and the contemplated transactions by the Company, certified by the secretary or
an assistant secretary of the Company as of the Closing Date.
(f) Resignations of the officers and directors of the Company,
effective as of the Closing Date.
(g) The Escrow Agreement, duly executed by an authorized
representative of the Company, and, to the escrow agent, the Escrow Shares.
SECTION 2.4. DELIVERIES BY THE PATRON STOCKHOLDERS AT THE CLOSING. At
the Closing, each Patron Stockholder shall deliver to the Company the
certificates representing their shares of Patron Common Stock (the "PATRON
COMMON STOCK CERTIFICATES") and duly executed securities powers in favor of the
Company in respect of such certificates.
SECTION 2.5. DELIVERIES BY PATRON AT THE CLOSING. At the Closing,
Patron shall deliver to the Company at the Closing:
(a) A certificate of good standing from the Secretary of State
of the State of Delaware, issued as of a date within two Business Days prior to
the Closing Date certifying that Patron is in good standing as a corporation in
the State of Delaware;
(b) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of Patron executing this Agreement and
any other document delivered pursuant hereto on behalf of Patron; and
(c) Copies of resolutions or consents of the board of
directors authorizing the execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an assistant secretary
of Patron as of the Closing Date; and
(d) Copies of the current versions of transaction documents
relating to Patron's proposed transactions with TrustWave Corporation and
Entelagent.
(e) The Escrow Agreement duly executed by an authorized
representative of Patron.
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ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF PATRON
AND THE PATRON STOCKHOLDERS
The obligation of Patron and each Patron Stockholder to
consummate the Share Exchange is subject to the satisfaction of the following
conditions as of the Closing:
SECTION 3.1. EXCHANGE BY OTHER PATRON STOCKHOLDERS; CANCELLATION OF
SHARES HELD BY ▇▇▇▇▇▇▇.
(a) Each Patron Stockholder shall have tendered all of his,
her or its respective Patron Common Stock Certificates for exchange pursuant to
the provisions of ARTICLE II.
(b) ▇▇▇▇ ▇▇▇▇▇▇▇, the President of the Company, shall have
returned to the Company for cancellation, certificates representing 4,000,000
SHARES of Company Common Stock.
(c) THE COMPANY SHALL HAVE ISSUED 1,801,688 SHARES OF COMPANY
COMMON STOCK TO CERTAIN INDIVIDUALS, SUCH THAT THE POST-CLOSING CAPITALIZATION
OF THE COMPANY SHALL NOT EXCEED 44,888,888.
SECTION 3.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in ARTICLE V hereof shall be true and
correct in all material respects at and as of the Closing.
SECTION 3.3. PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the President of the Company shall
have certified to Patron and the Patron Stockholders in writing to such effect
and to the further effect that all the conditions set forth in this ARTICLE III
have been satisfied.
SECTION 3.4. APPROVAL. All corporate and other proceedings to be taken
by the Company in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and substance to Patron
and the Patron Stockholders shall have received all such counterpart originals
or certified or other copies of such documents as they reasonably may request.
SECTION 3.5. OPINION OF COMPANY'S COUNSEL. Patron and the Patron
Stockholders shall have received from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel to the Company, an
opinion dated the Closing Date in form and scope satisfactory to Patron and the
Patron Stockholders, confirming: (I) THE DUE INCORPORATION, VALID EXISTENCE AND
GOOD STANDING AND CORPORATE POWER OF THE COMPANY TO OWN AND OPERATE ITS
PROPERTIES AND ASSETS, (II) THE POWER AND AUTHORITY OF THE COMPANY TO ENTER INTO
AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND (III) THE DUE AUTHORIZATION AND
valid issuance of the Exchange Shares.
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SECTION 3.6. ARTICLES OF INCORPORATION. The Articles of Incorporation
of the Company shall read in its entirety as set forth in EXHIBIT A hereto.
SECTION 3.7. SHAREHOLDER NOTIFICATION. The Company shall have filed
with the Securities and Exchange Commission an information statement on Schedule
14, in a form satisfactory to Patron, which shall, among other things, describe
the nature of the transactions contemplated by this agreement and seek election,
effective as of the Closing, of ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ as directors of the Company, and such information statement shall have
become effective and the required notice period shall have concluded.
SECTION 3.8. DUE DILIGENCE. Patron shall have completed its due
diligence with respect to the Company to its satisfaction.
SECTION 3.9. NO RESTRAINT. No claim, suit, proceeding or action shall
be pending or threatened challenging the transaction contemplated hereby or the
authority of the parties to enter into this Agreement or to consummate the
transaction.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligation of the Company to consummate the Share Exchange
is subject to the satisfaction of the following conditions as of the Closing:
SECTION 4.1. EXCHANGE BY THE PATRON STOCKHOLDERS. Each Patron
Stockholder shall have tendered his, her, or its respective Patron Common Stock
Certificates for exchange pursuant to the provisions of ARTICLE II.
SECTION 4.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in ARTICLES VI and VII shall be true
and correct in all material respects at and as of the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Patron and the
Patron Stockholders, as of the date of this Agreement, as follows:
SECTION 5.1. ORGANIZATION AND STANDING. The Company is a corporation
duly organized and validly existing under the laws of the State of Nevada and is
in good standing under such laws. The Company has the requisite corporate power
to own and operate its properties and assets, and to carry on its business as it
is now being conducted and as proposed to be conducted. The Company is duly
qualified or licensed as a foreign corporation and is in good standing in all
jurisdictions where the nature of its business or property makes such
qualification or licensing necessary except where the failure to do so would not
have a material adverse effect (financial or otherwise) on the business,
6
property, prospects, assets or liabilities of the Company (a "COMPANY MATERIAL
ADVERSE EFFECT"). The Company has provided to Patron copies of its Articles of
Incorporation and Bylaws. Such copies are true, correct and complete and contain
all amendments through the date of Closing
SECTION 5.2. CORPORATE POWER. The Company has all requisite legal and
corporate power to execute and deliver this Agreement and to consummate the
other transactions contemplated by the terms of this Agreement, and to carry out
and perform its obligations under the terms of this Agreement.
SECTION 5.3. CAPITALIZATION. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock, of which
6,687,200 shares have been issued and are outstanding. All issued and
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable. All outstanding securities of the
Company were issued in compliance with applicable federal and state securities
laws. There are no preemptive rights, options or warrants or other conversion
privileges or rights now outstanding to purchase or acquire any of the capital
stock of the Company and no shares of the Company's capital stock are reserved
for issuance. The Company is not obligated to repurchase any shares of its
capital stock or any other securities. To the Company's knowledge, there is no
agreement or understanding between any holders of in excess of five percent (5%)
of the Company's outstanding securities (collectively, the "5% SHAREHOLDERs")
that affects or relates to the voting or giving of written consents with respect
to any security or the voting by a director of the Company and, to the Company's
knowledge, there is no agreement or understanding between any Persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Company.
SECTION 5.4. SUBSIDIARIES. The Company does not own or control,
directly or indirectly, any interest in any other corporation, partnership,
limited liability company, association or other business entity. The Company is
not a participant in any joint venture or similar arrangement.
SECTION 5.5. AUTHORIZATION. All corporate action on the part of the
Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company; the
consummation by the Company of the other transactions contemplated hereunder or
thereunder, and the performance of all of the Company's obligations under this
Agreement, have been taken or will be taken prior to the Closing. This
Agreement, when executed and delivered by the Company, shall constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to: (a) laws of general application relating
to bankruptcy, insolvency, and the relief of debtors or (b) general equitable
principles.
SECTION 5.6. NO VIOLATION; CONSENTS. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby do not and will not contravene any Applicable
Law. The execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
violate, result in a breach of or constitute (with due notice or lapse of time
or both) a default under any contract, lease, loan agreement, mortgage, security
7
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, (ii) result in the creation or imposition of any Lien (other than a
Permitted Lien) upon any of the properties or assets of the Company or (iii)
violate any provision of its Articles of Incorporation or Bylaws.
(b) No consent, authorization or order of, or filing or
registration with, any Governmental Authority or other person is required to be
obtained or made by the Company for the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby.
(c) The Company is not subject to any statutory or contractual
provision dealing with "change of control", control share acquisition, business
combination, fair price, or any similar provision that would limit in any way
the rights of the Patron Stockholders to the Exchange Shares.
SECTION 5.7. SECURITIES LAWS COMPLIANCE. The Company is relying on the
exemption contained in Section 4(2) of the Securities Act and Regulation D
promulgated under the Securities Act to exempt the Share Exchange from the
registration requirements of the Securities Act. The Company is not a party or
otherwise subject to any contract, arrangement or understanding requiring it to
pay, and will not, directly or indirectly, make any payment of, any commission
or other remuneration to any broker, dealer, sales person, agent or any other
Person for soliciting the Share Exchange. In addition, no financial advisor,
broker, dealer, sales person, agent or any other Person has been engaged or is
authorized by the Company to express to any Patron Stockholder any statement,
opinion, recommendation or judgment with respect to the relative merits and
risks of the Share Exchange.
SECTION 5.8. LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the Company's knowledge, threatened against, the
Company or its respective properties (nor, to the Company's knowledge against
any of the officers or directors of the Company) before any court, arbitrator or
governmental agency which, in the case of actions, suits, proceedings or
investigations pending or threatened against officers or directors of the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate. Neither the
Company, nor to the Company's knowledge, any officer, key employee or 5%
Shareholder of the Company, in his capacity as such, is in default with respect
to any order, writ, injunction, decree, ruling or decision of any court,
commission, board or any other government agency.
SECTION 5.9. EMPLOYEES. Other than ▇▇▇▇ ▇▇▇▇▇▇▇, the Company has no
employees or employee benefit plans.
SECTION 5.10. BROKERS OR FINDERS; OTHER OFFERS. EXCEPT AS SET FORTH IN
SCHEDULE 5.10, THE Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
SECTION 5.11. DISCLOSURE. The Company has provided Patron and the
Patron Stockholders with all the information which Patron and the Patron
Stockholders have requested for deciding whether to consummate the transaction
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contemplated by this Agreement. No representation or warranty of the Company
contained in this Agreement and the exhibits attached hereto or, any certificate
furnished or to be furnished to Patron and the Patron Stockholder at the Closing
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
SECTION 5.12. AGREEMENTS; ACTION. (a) Except for agreements explicitly
contemplated by this Agreement, there are no agreements, understandings,
instruments, contracts, judgments, orders, writs, decrees or proposed
transactions to which the Company is a party or by which it is bound that
involve: (i) obligations (contingent or otherwise) of, or payments to, the
Company or (ii) any contract, agreement, commitment, arrangement or
understanding relating to any joint venture, partnership or sharing of profits
or losses with any Person.
(b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock or (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities.
(c) Except for the transactions contemplated herein, the
Company has not engaged in the past three (3) months in any discussion (i) with
any representative of any corporation regarding the merger of the Company with
or into any such corporation, (ii) with any representative of any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company would be disposed
of, or (iii) regarding any other form of liquidation, dissolution or winding up
of the Company.
SECTION 5.13. TAX RETURNS AND PAYMENTS. The Company has filed all
federal tax returns, forms or reports, which are due or required to be filed by
it prior to the date hereof and has paid all taxes, penalty fees, or assessments
which have or may become due pursuant to such returns or pursuant to any
assessments received. All such returns are complete and accurate.
SECTION 5.14. INTELLECTUAL PROPERTY. The Company owns no intellectual
property.
SECTION 5.15. REGISTRATION RIGHTS. EXCEPT AS SET FORTH IN SCHEDULE
5.15, THE Company has not granted or agreed to grant to any person or entity any
rights (including piggyback registration rights) to have any securities of the
Company registered with the SEC or any other Governmental Authority.
SECTION 5.16. ANTI-DILUTION AND OTHER SHARES. No stockholder of the
Company or other person or entity has any preemptive right of subscription or
purchase or contractual right of first refusal or similar right with respect to
any issuance of securities by the Company. The consummation of the Share
Exchange will not result in the issuance of any additional shares of the Company
Common Stock or the triggering of other anti-dilution or similar rights
contained in any options, warrants, debentures or other securities or agreements
of the Company.
SECTION 5.17. REAL PROPERTY. The Company does not own, lease, sublease,
or otherwise have an interest in real property.
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SECTION 5.18. OTC LISTING. The Company is currently QUOTED on the OTC
Bulletin Board under the trading symbol "CPFS". The Company is not in default
with respect to any listing or other requirements of the National Association of
Securities Dealers, Inc.
SECTION 5.19. SEC DOCUMENTS. Since March 31, 1999, the Company has been
an issuer required to file reports under Section 13(a) of the Exchange Act. The
Company has filed with the SEC all reports, statements, exhibits and other
documents (collectively, the "SEC DOCUMENTS") required to be filed by reporting
companies pursuant to the Securities Act and the Exchange Act. As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended, or the Exchange
Act, as the case may be, each as in effect on the date so filed, and at the time
filed with the SEC none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as of their respective dates as to form in
all material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except in
the case of the unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present in all
material respects the financial position of the Company as at the dates thereof
and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
SECTION 5.20. ISSUANCE OF SHARES. As of the Closing Date, all of the
shares of Company Common Stock to be delivered to the Patron Stockholders will
be free and clear of all taxes, liens, encumbrances, charges or assessments of
any kind and shall not be subject to preemptive rights, tag-along rights, or
similar rights of any of the stockholders of the Company. As of the Closing
Date, such shares will be legally and validly issued in compliance with all
applicable U.S. federal and state securities laws, and will be, when issued,
fully paid and nonassessable shares of Company Common Stock.
SECTION 5.21. LIABILITIES. Except as set forth in the SEC Documents, to
the knowledge of the Company, the Company has no liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a balance sheet of
the Company or in the notes thereto, other than liabilities and obligations
incurred in the ordinary course of business since June 30, 2002.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PATRON STOCKHOLDERS
As an inducement to the Company to enter into this Agreement
and to consummate the transactions contemplated hereby, each Patron Stockholder,
severally and not jointly, represents and warrants to the Company, as of the
date of this Agreement, as follows:
10
SECTION 6.1. TITLE; AUTHORITY; ENFORCEABILITY. (a) Such Patron
Stockholder has the full power and authority to exchange, assign and transfer
its Patron Common Stock proposed to be exchanged hereunder and to acquire the
Exchange Shares issuable upon exchange of such Patron Common Stock and when the
same are accepted for exchange, the Company will acquire good and unencumbered
title to such Patron Common Stock, free and clear of all Liens or Encumbrances
created by such Patron Stockholder. Such Patron Stockholder acknowledges that
the number of shares of Patron Common Stock held by him, her or it identified in
SCHEDULE A is correct and reflects all of the securities of Patron held by such
stockholder.
(b) Such Patron Stockholder has duly executed and delivered
this Agreement. This Agreement constitutes, assuming the due execution by the
Company and Patron, the legal, valid and binding obligation of such Patron
Stockholder, enforceable against such Patron Stockholder in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(c) Such Patron Stockholder will, upon request, execute and
deliver any additional documents deemed by the Company to be reasonably
necessary to more fully evidence the exchange, assignment and transfer of the
Patron Common Stock contemplated hereby.
SECTION 6.2. NO CONFLICTS; CONSENTS. The execution, delivery and
performance by such Patron Stockholder of this Agreement will not conflict with,
constitute a breach of, or default under, or violate any provision of any
agreement, indenture, mortgage, or other instrument to which such Patron
Stockholder is a party or by which such Patron Stockholder is or may be bound or
to which any of such Patron Stockholder's property or assets is subject, or any
statute, law, rule, regulation, ruling, judgment, injunction, order or decree
applicable to such Patron Stockholder or to any property or assets of such
Patron Stockholder. No consent, authorization or order of, or filing or
registration with, any Governmental Authority or other person is required to be
obtained or made by such Patron Stockholder for the execution, delivery and
performance by such Patron Stockholder of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 6.3. PATRON STOCKHOLDER ACKNOWLEDGEMENTS. (a) Such Patron
Stockholder understands that the issuance of the Exchange Shares by the Company
to such Patron Stockholder is intended to be exempt from registration under the
Securities Act pursuant to Regulation D and Section 4(2) thereof. Accordingly,
such Patron Stockholder acknowledges that the Exchange Shares to be issued and
delivered to such Patron Stockholder in accordance with the terms and subject to
the conditions of this Agreement have not been and will not be registered under
the Securities Act or any state securities laws and may not be sold or otherwise
transferred without compliance with the Securities Act and any applicable state
securities laws. Such Patron Stockholder further represents, warrants and
covenants that (i) the Exchange Shares are being acquired solely for his/her own
account only, for investment purposes only, and not with a view to the
distribution or public offering thereof, nor with any intention of selling the
same immediately or at any particular future time and (ii) none of the Exchange
11
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with the Securities Act and
any applicable state securities laws AND WILL CONTAIN A RESTRICTIVE LEGEND TO
SUCH EFFECT.
(b) Such Patron Stockholder has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Exchange Shares and such Patron
Stockholder is capable of bearing the economic risks of such investment.
(c) Such Patron Stockholder is an "accredited investor," as
such term is defined in Regulation D under the Securities Act.
(d) Such Patron Stockholder has had the opportunity to ask
questions of, and receive answers from, representatives of the Company
concerning the Company and the terms and conditions of this transaction, as well
as to obtain any information requested by such Patron Stockholder. Any questions
raised by such Patron Stockholder concerning the transactions contemplated by
this Agreement have been answered to the satisfaction of such Patron
Stockholder. Such Patron Stockholder's decision to enter into the transactions
contemplated hereby is based in part on the answers to such questions as such
Patron Stockholder has raised concerning the transaction and on such Patron
Stockholder's own evaluation of the risks and merits of the purchase and the
Company's proposed business activities.
(e) Such Patron Stockholder understands that no Governmental
Authority has made any finding or determination as to the merit for investment
of, nor have any such agencies or governmental authorities made any
recommendation or endorsement with respect to, the Exchange Shares.
(f) Such Patron Stockholder understands that it is his, her or
its responsibility to obtain its own legal and financial advisors (including tax
advisors) with respect to this Agreement and the transactions contemplated
hereby, and that Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ is representing only Patron in
connection with this Agreement and not any individual Patron Stockholder.
ARTICLE VII
REPRESENTATIONS, COVENANTS, AND
WARRANTIES OF PATRON
As an inducement to, and to obtain the reliance of the
Company, Patron represents and warrants as follows:
SECTION 7.1. ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. Patron is
a corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. Patron
has the requisite corporate power to own and operate its properties and assets,
and to carry on its business as now conducted and as proposed to be conducted.
Patron is duly qualified or licensed as a foreign corporation and is in good
standing in all jurisdictions where the nature of its business or property makes
such qualification or licensing necessary except where the failure to do so
would not have a material adverse effect (financial or otherwise) on the
12
business, property, prospects, assets or liabilities of Patron (a "PATRON
MATERIAL ADVERSE EFFECT"). Patron has made available to the Company copies of
its Certificate of Incorporation and Bylaws. Said copies are true, correct and
complete and contain all amendments through the date of Closing.
SECTION 7.2. CORPORATE POWER. Patron has all requisite legal and
corporate power to execute and deliver this Agreement and to consummate the
other transactions contemplated by the terms of this Agreement, and to carry out
and perform its obligations under the terms of this Agreement.
SECTION 7.3. CAPITALIZATION. The authorized capital stock of Patron
consists of: 50,000,000 shares of common stock, par value $0.01 per share
("COMMON STOCK"), of which 29,400,000 shares are issued and outstanding; and
10,000,000 shares of preferred stock, par value $0.01 per share, of which no
shares are issued and outstanding. All issued and outstanding shares have been
duly authorized and validly issued, and are fully paid and nonassessable. All
outstanding securities of Patron were issued in compliance with applicable
federal and state securities laws. Except as described on SCHEDULE 7.3 attached,
there are no preemptive rights, options or warrants or other conversion
privileges or rights now outstanding to purchase or acquire any of the capital
stock of Patron and no shares of Patron's capital stock are reserved for
issuance. Patron is not obligated to repurchase any shares of its capital stock
or any other securities. To Patron's knowledge, there is no agreement or
understanding between any holders of in excess of five percent (5%) of Patron's
outstanding securities (collectively, the "5% SHAREHOLDERS") that affects or
relates to the voting or giving of written consents with respect to any security
or the voting by a director of Patron, and, to Patron's knowledge, there is no
agreement or understanding between any Persons that affects or relates to the
voting or giving of written consents with respect to any security or the voting
by a director of Patron.
SECTION 7.4. SUBSIDIARIES. Except as disclosed in SCHEDULE 7.4, Patron
does not currently own or control, directly or indirectly, any interest in any
other corporation, partnership, limited liability company, association or other
business entity. Patron is not a participant in any joint venture or similar
arrangement.
SECTION 7.5. AUTHORIZATION. All corporate action on the part of Patron,
its directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by Patron; the consummation by Patron
of the other transactions contemplated hereunder or thereunder, and the
performance of all of Patron's obligations under this Agreement, have been taken
or will be taken prior to the Closing. This Agreement, when executed and
delivered by Patron, shall constitute the valid and binding obligation of Patron
enforceable against Patron in accordance with its terms, subject to: (a) laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors or (b) general equitable principles.
SECTION 7.6. NO VIOLATION; CONSENTS. (a) The execution, delivery and
performance by Patron of this Agreement and the consummation of the transactions
contemplated hereby do not and will not contravene any Applicable Law. The
execution, delivery and performance by Patron of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
13
trust indenture or other agreement or instrument to which Patron is a party or
by which it is bound or to which any of its properties or assets is subject,
(ii) result in the creation or imposition of any Lien (other than a Permitted
Lien) upon any of the properties or assets of Patron or (iii) violate any
provision of its Articles of Incorporation or Bylaws.
(b) No consent, authorization or order of, or filing or
registration with, any Governmental Authority or other person is required to be
obtained or made by Patron for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 7.7. LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to Patron's knowledge, threatened against, Patron or
its properties (nor, to Patron's knowledge against any of the officers or
directors of Patron) before any court, arbitrator or governmental agency which,
in the case of actions, suits, proceedings or investigations pending or
threatened against officers or directors of Patron. Patron is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by Patron currently pending or which Patron intends
to initiate. Neither Patron, nor to Patron's knowledge, any officer, key
employee or 5% Shareholder of Patron, in his capacity as such, is in default
with respect to any order, writ, injunction, decree, ruling or decision of any
court, commission, board or any other government agency.
SECTION 7.8. EMPLOYEES. Except as disclosed in SCHEDULE 7.8, Patron has
no employment contracts with any of its employees. Except as disclosed in
SCHEDULE 7.8, Patron has no employee benefit plans, including any deferred
compensation agreement, bonus plan, incentive plan, profit sharing plan,
retirement agreement or other employee compensation agreement, now in force.
SECTION 7.9. BROKERS OR FINDERS; OTHER OFFERS. Except as disclosed in
SCHEDULE 7.9, Patron has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by Patron, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
SECTION 7.10. DISCLOSURE. Patron has provided the Company with all the
information which the Company has requested for deciding whether to consummate
the transaction contemplated by this Agreement. No representation or warranty of
Patron contained in this Agreement and the exhibits attached hereto or, any
certificate furnished or to be furnished to the Company at the Closing contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
SECTION 7.11. AGREEMENTS; ACTION. (a) Except for agreements explicitly
contemplated by this Agreement, or as set forth in SCHEDULE 7.8, there are no
agreements, understandings, instruments, contracts, judgments, orders, writs,
decrees or proposed transactions to which Patron is a party or by which it is
bound that involve: (i) obligations (contingent or otherwise) of, or payments
14
to, Patron in excess of $50,000 or (ii) any contract, agreement, commitment,
arrangement or understanding relating to any joint venture, partnership or
sharing of profits or losses with any Person.
(b) Patron has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock or (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $25,000 or in excess of
$50,000 in the aggregate.
(c) Copies of all contracts, agreements or instruments
appearing on the SCHEDULE 7.11 (hereinafter collectively referred to as the
"CONTRACTS") have been delivered to counsel to the Company. Patron has fulfilled
and performed in all material respects its obligations under each of the
Contracts required to be performed prior to the date hereof, and Patron is not
in, or to the knowledge of Patron, alleged to be in, material breach or default
under, nor is there to the knowledge of Patron, alleged to be any basis for
termination of any of the Contracts or any loss of right thereunder and, to the
knowledge of Patron, no other party to any of the Contracts has materially
breached or defaulted thereunder. To the knowledge of Patron, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a loss of right,
material default or breach by Patron or by any such other party.
SECTION 7.12. TAX RETURNS AND PAYMENTS. Patron has not yet been
required by law to file any tax return with any federal, state or local
authority.
SECTION 7.13. INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE
7.12, Patron owns no intellectual property.
SECTION 7.14. REGISTRATION RIGHTS. Except as described on SCHEDULE
7.14, Patron has not granted or agreed to grant to any person or entity any
rights (including piggyback registration rights) to have any securities of
Patron registered with the SEC or any other governmental authority.
SECTION 7.15. ANTI-DILUTION AND OTHER SHARES. Except as described on
SCHEDULE 7.15, no stockholder of Patron or other person or entity has any
preemptive right of subscription or purchase or contractual right of first
refusal or similar right with respect to any issuance of securities by Patron.
The consummation of the Patron Merger will not result in the issuance of any
additional shares of Patron Common Stock or the triggering of other
anti-dilution or similar rights contained in any options, warrants, debentures
or other securities or agreements of Patron.
SECTION 7.16. REAL PROPERTY. Except as described in SCHEDULE 7.16,
Patron does not own, lease, sublease, or otherwise have an interest in real
property.
ARTICLE VIII
SPECIAL COVENANTS
SECTION 8.1. ACTIVITIES OF THE COMPANY. From and after the date hereof
until the Closing Date, the Company shall, in all material respects, except as
contemplated by this Agreement, carry on its business in the ordinary course as
15
currently conducted. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement, during such period, the
Company shall not, without the prior written consent of Patron:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, or (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock;
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities;
(c) amend its Articles of Incorporation or Bylaws or other
similar organizational documents;
(d) acquire, or agree to acquire, in a single transaction or
in a series of related transactions, any business or assets;
(e) make or agree to make any new capital expenditure;
(f) sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets;
(g) increase the salary or wages payable or to become payable
to its directors or officers, or enter into any employment or severance
agreement with, or establish, adopt, enter into or amend any bonus, profit
sharing, thrift, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination or severance plan, agreement, policy or
arrangement for the benefit of, any director, officer or employee, except, in
each case, in the ordinary course of business, or as may be required by the
terms of any such plan, agreement, policy or arrangement or to comply with
applicable law;
(h) except as may be required as a result of a change in law
or in generally accepted accounting principles, make any material change in its
method of accounting;
(i) enter into, modify in any material respect, amend in any
material respect or terminate any material contract or agreement to which the
Company is a party, or waive, release or assign any material rights or claims,
in each case, in any manner adverse to the Company; or
(j) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
SECTION 8.2. ACCESS TO PROPERTIES AND RECORDS. Until the Closing Date,
Patron and the Company will afford to the other party's officers and authorized
representatives full access to the properties, books, and records of the other
party in order that each party may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of Patron or the Company
16
and will furnish the other party with such additional financial and other
information as to the business and properties of Patron or the Company as each
party shall from time to time reasonably request.
SECTION 8.3. NEW BOARD OF DIRECTORS AND OFFICERS. On the Closing Date,
the board of directors and officers of the Company shall resign and in their
place nominees of Patron shall be appointed to the positions designated by
Patron.
SECTION 8.4. INFORMATION STATEMENT. As promptly as possible following
execution of this Agreement, the Company shall prepare and file with the SEC, a
preliminary information statement including information concerning this
Agreement and related material (the "INFORMATION STATEMENT") relating to, among
other things, the election of ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ as directors of the Company effective as of the Closing Date, and, as
promptly as practicable following receipt of the SEC's comments thereon (or,
should no SEC comments be forthcoming or the lapse of the period of time during
which SEC comments are required to be furnished, promptly following a
determination that no comments are forthcoming or the lapse of such period), the
Company shall file with the SEC and mail to its stockholders of record a
definitive Information Statement relating to such matters.
SECTION 8.5. PUBLIC ANNOUNCEMENTS. The Company and Patron will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, fiduciary
duties or by obligations pursuant to any listing agreement with any national
securities exchange.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual written consent of the Company and Patron;
(b) by Patron, if the Company shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
cannot be or has not been cured within 30 days after the giving of written
notice to the Company;
(c) by the Company, if Patron shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
cannot be or has not been cured within 30 days after the giving of written
notice to Patron; or
(d) by the Company or Patron if the Closing shall not have
been consummated on or prior to November 30, 2002.
17
SECTION 9.2. EFFECT OF TERMINATION. If this Agreement is terminated by
either Patron or the Company as provided in SECTION 9.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of the Company or Patron or their respective officers or directors, except with
respect to this ARTICLE IX; PROVIDED, HOWEVER, that nothing herein shall relieve
any party for liability for any willful breach hereof.
SECTION 9.3. NOTICES. Any notices and other communications required to
be given pursuant to this Agreement shall be in writing and shall be effective
upon delivery by hand (against written receipt) or upon receipt if sent by
certified or registered mail (postage prepaid and return receipt requested) or
by a nationally recognized overnight courier service (appropriately marked for
overnight delivery) or upon transmission if sent by facsimile (with request for
immediate confirmation of receipt in a manner customary for communications of
such respective type and with physical delivery of the communication being made
by one of the other means specified in this SECTION 8.1 as promptly as
practicable thereafter). Notices are to be addressed as follows:
(a) If to the Company to:
Combined Professional Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: __________
Facsimile: __________
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Patron to:
Patron Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
18
With a copy to:
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, LLP
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Patron Stockholders to the addresses set forth
next to their names on the signature pages hereto; or to such other respective
addresses as any of the parties hereto shall designate to the others by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
SECTION 9.4. FEES AND EXPENSES. Each of the parties hereto shall pay
its own respective fees and expenses (including, without limitation, the fees
and disbursements of any attorneys, accountants, investment bankers, consultants
or other representatives) incurred in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions are
consummated.
SECTION 9.5. SPECIFIC PERFORMANCE. Each party hereto acknowledges and
agrees that in the event of any breach or default by a party under this
Agreement, the other parties hereto would be irreparably and immediately harmed
and could not be made whole by monetary damages. It is accordingly agreed that
in such case (i) each defaulting party hereto will waive, in any action, suit or
proceeding for specific performance or other relief referred to in this
paragraph, the defense of adequacy of money damages or a remedy at law, and (ii)
the other non-defaulting parties shall be entitled, in addition to any other
remedy to which it may be entitled at law or in equity or otherwise, to compel
specific performance of this Agreement or to obtain a temporary restraining
order, preliminary and permanent injunction or other equitable relief or remedy,
in any action, suit or proceeding instituted in any state or federal court.
SECTION 9.6. ENTIRE AGREEMENT; WAIVERS AND AMENDMENTS. This Agreement
(including the documents and instruments referred to herein) contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior written or oral agreements, representations and
understandings with respect thereto. This Agreement may only be amended or
modified, and the terms hereof may only be waived, by a writing signed by each
party hereto or, in the case of a waiver, by the party entitled to the benefit
of the terms being waived.
SECTION 9.7. ASSIGNMENT; BINDING EFFECT. This Agreement may not be
assigned or delegated, in whole or in part, by either party hereto without the
prior written consent of the other parties hereto. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
SECTION 9.8. SEVERABILITY. If any provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent declared invalid or unenforceable without affecting the validity or
enforceability of the other provisions of this Agreement, and the remainder of
19
this Agreement shall remain binding on the parties hereto (so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party). Upon such determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
SECTION 9.9. NO THIRD PARTY BENEFICIARIES. This Agreement is for the
benefit of the parties hereto and is not intended to confer upon any other
Person any rights or remedies hereunder.
SECTION 9.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware.
SECTION 9.11. INTERPRETATION. This Agreement is the result of
arms-length negotiations between the parties hereto and has been prepared
jointly by the parties. In applying and interpreting the provisions of this
Agreement, there shall be no presumption that the Agreement was prepared by any
one party or that the Agreement shall be construed in favor of or against any
one party.
SECTION 9.12. CAPTIONS. The Article and Section Headings in this
Agreement are inserted for convenience of reference only, and shall not affect
the interpretation of this Agreement.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
[SIGNATURE PAGE TO FOLLOW]
20
IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first written above.
COMBINED PROFESSIONAL SERVICES, INC.
By:
--------------------------------
Name:
Title:
PATRON SYSTEMS, INC.
--------------------------------
Name:
Title:
PATRON STOCKHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
The Allin Dynastic Trust
--------------------------------
By:
Its: Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
21
▇▇▇▇▇▇▇, Inc.
--------------------------------
By:
Its:
▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
22
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇, TBTE
--------------------------------
Waterway Trust
--------------------------------
By:
Its: Trustee
Kingsgate Trust
--------------------------------
By:
Its: Trustee
Nottingham Trust
--------------------------------
By:
Its: Trustee
H.N. Trust
--------------------------------
By:
Its: Trustee
Wentworth Trust
--------------------------------
By:
Its: Trustee
St. Swithin Trust
--------------------------------
By:
Its: Trustee
23
Bellini Trust
--------------------------------
By:
Its: Trustee
Cloister Trust
--------------------------------
By:
Its: Trustee
24
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. TBTE
--------------------------------
25
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
26
▇▇▇▇ ▇▇▇▇▇
--------------------------------
27
▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
28
▇▇▇▇ Associates, Inc.
--------------------------------
29
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
30
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
31
SCHEDULE A
SHARES OF PATRON SHARES OF COMPANY
PATRON STOCKHOLDERS COMMON STOCK COMMON STOCK
------------------- ----------------- ------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 6,050,000 6,050,000
------------------------
The Allin Dynastic Trust 1,675,000 1,675,000
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,100,000 2,100,000
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,000,000 2,000,000
▇▇▇▇▇▇▇, Inc. 2,600,000 2,600,000
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇, TBTE 800,000 800,000
------------------------
Waterway Trust 1,250,000 1,250,000
------------------------
Kingsgate Trust 1,250,000 1,250,000
------------------------
Nottingham Trust 1,250,000 1,250,000
------------------------
H.N. Trust 1,000,000 1,000,000
------------------------
Wentworth Trust 1,000,000 1,000,000
------------------------
SHARES OF PATRON SHARES OF COMPANY
PATRON STOCKHOLDERS COMMON STOCK COMMON STOCK
------------------- ----------------- ------------------
St. Swithin Trust 500,000 500,000
------------------------
Bellini Trust 250,000 250,000
------------------------
Cloister Trust 675,000 675,000
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. TBTE 1,500,000 1,500,000
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,550,000 2,550,000
------------------------
▇▇▇▇ ▇▇▇▇▇ 835,000 835,000
------------------------
▇▇▇▇▇ ▇▇▇▇▇ 500,000 500,000
------------------------
▇▇▇▇ Associates, Inc. 1,000,000 1,000,000
------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 215,000 215,000
------------------------
SHARES OF PATRON SHARES OF COMPANY
PATRON STOCKHOLDERS COMMON STOCK COMMON STOCK
------------------- ----------------- ------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 400,000* 400,000
------------------------
====================== ====================
29,400,000 29,400,000
* The issuance of shares of Patron Common Stock to ▇▇. ▇▇▇▇▇▇▇▇▇▇ is
contingent on the signing of this Agreement.