SCHEDULE 14C
(RULE 14c-101)
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary information statement [ ] Confidential, for use of the Commission
only (as permitted by Rule 14c-5(d)(2))
[ ] Definitive information statement
PATRON HOLDINGS, INC.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PATRON HOLDINGS, INC.
311 BELLE FORET DRIVE, SUITE 150
LAKE BLUFF, ILLINOIS 60044
INFORMATION STATEMENT
ACTION TAKEN BY
WRITTEN CONSENT OF STOCKHOLDERS
Notice is hereby given that on October 23, 2002, PATRON HOLDINGS, INC.,
a Nevada corporation formerly known as Combined Professional Services, Inc. (the
"Corporation"), obtained the written consent of the holders of a majority of its
outstanding stock as of October 23, 2002, to the following action:
A change in domicile and reincorporation of the Corporation from the
State of Nevada to the State of Delaware by merger (the "Merger") of the
Corporation with and into its wholly owned subsidiary, Patron Systems, Inc., a
Delaware corporation ("Patron"), which will also result in:
(a) the change of the Corporation's name to Patron Systems, Inc.;
(b) the creation of a classified Board of Directors for the
Corporation; and
(c) the adoption of a Second Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws.
Section 78.320 of the Nevada General Corporation Law provides that any
action which may be taken at a meeting of the stockholders may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, provided that prompt notice of the taking
of the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
On October 23, 2002, by unanimous written consent, the Board of
Directors of the Corporation (the "Board") approved the Merger as described in
the Agreement and Plan of Merger (the "Plan of Merger"). A consent in writing
approving the foregoing was signed by holders of outstanding stock having
19,000,000 votes, which shares represented greater than a majority of the total
number of shares outstanding of the Corporation. The Plan of Merger has also
been approved by the Corporation as the sole stockholder of Patron and by the
directors of Patron, in unanimous written consents of the stockholder and
directors, each dated October 23, 2002.
This Information Statement is being mailed on or about March __, 2003
to stockholders of record as of October 23, 2002, in order to provide such
stockholders with information relating to the Merger.
By Order of the Board of Directors
Chicago, Illinois
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March , 2003 Robert E. Yaw II
--- Secretary
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WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
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SHARE EXCHANGE;
CHANGE IN CONTROL
On September 27, 2002, the Corporation entered into, and on October 11,
2002, the Corporation consummated the transactions contemplated by, an Amended
and Restated Share Exchange Agreement (the "Exchange Agreement") among the
Corporation, Patron and the holders of all of the outstanding capital stock of
Patron (the "Patron Stockholders"). Pursuant to the Exchange Agreement, the
Corporation agreed to issue at closing to each Patron Stockholder, on a one for
one basis and in exchange for all of the outstanding shares of capital stock of
Patron, an aggregate of 25,400,000 shares of the Corporation's common stock, par
value $0.001 per share (the "Common Stock"), and to reserve for issuance
11,000,000 shares of Common Stock pursuant to certain transactions proposed by
Patron (the "Share Exchange"). On September 27, 2002, the Board approved, and no
stockholder approval was necessary for, the Share Exchange. Upon the closing of
the Share Exchange, the Patron Stockholders held approximately 85% of the
outstanding capital stock of the Corporation.
Patron was formed in April 2002 by a group of business leaders to
provide comprehensive, end-to-end information security solutions to global
corporations and government institutions. Patron plans to focus on two primary
areas: trusted security services and next generation integrated security
products. The Patron security services group plans to work with organizations to
ensure that global enterprises implement information security policies,
procedures and products which result in "trusted" information environments.
Patron expects to offer information security and vulnerability assessments,
certification programs, remediation, implementation, training, monitoring and
management services.
Patron's product group, through the planned acquisition of selected
third generation software, intends to provide a range of products which will be
recognizable, certifiable, and standards-based to ensure a "trusted" solution
for the enterprise. Patron currently has no material assets and no current
operations. To date, Patron's principal activities have consisted of the
development of its business plan, capital raising, and evaluation and
negotiation of potential
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acquisitions. Patron's business plan contemplates the completion of acquisitions
with several leading security services and software product firms in the United
States and the United Kingdom.
MERGER OF THE CORPORATION INTO PATRON
The Board believes that it is in the best interests of the Corporation
and its stockholders that the Corporation be reincorporated from the State of
Nevada to the State of Delaware. The reincorporation will be accomplished by
merging the Corporation with and into its wholly owned subsidiary, Patron,
pursuant to the terms and conditions set forth in the Plan of Merger to be
entered into between the Corporation and Patron, a copy of which is attached to
this Information Statement as Exhibit A.
MECHANICS OF THE MERGER
The Merger will become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware and Articles of
Merger with the Secretary of State of the State of Nevada. At the time of the
effectiveness of the Plan of Merger (the "Effective Date"), the following shall
occur:
o The Corporation will merge with and into Patron, with Patron
continuing as the surviving corporation.
o The name of the surviving corporation will be Patron Systems, Inc.
o The surviving corporation will be domiciled in the State of Delaware
and will be governed by the General Corporation Law of Delaware.
o Each share of common stock of the Corporation outstanding immediately
prior to the Effective Date will be automatically converted into one share of
common stock of Patron. All the shares of common stock of Patron previously held
by the Corporation will be cancelled.
o The persons serving as officers and directors of Patron will serve in
the same capacity for the surviving corporation. The certificate of
incorporation governing the surviving corporation will authorize the issuance of
150,000,000 shares of common stock, $0.01 par value per share and 75,000,000
shares of preferred stock, $0.01 par value per share.
PURPOSE OF THE REINCORPORATION
Delaware has an established policy of encouraging public companies to
establish domicile in that state. Delaware has been a leader in adopting
comprehensive, modern and flexible corporate laws, which are periodically
updated and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware in a manner similar to that proposed by
the Corporation. Delaware courts have developed considerable
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expertise in dealing with corporate issues, and a substantial body of case law
has developed construing Delaware law and establishing public policy with
respect to corporate legal issues.
The Board believes that the overall effect of the Merger will be to
enhance the Board's ability to consider all appropriate courses of action with
respect to significant transactions, along with more general corporate matters,
for the benefit of all stockholders. Moreover, the Board believes that (a) the
enhanced certainty with respect to the duties of directors could be an important
factor in attracting and retaining quality persons to serve on the board of
directors, and (b) a Delaware domicile could result in the Corporation being
more attractive to prospective investors.
CLASSIFIED BOARD OF DIRECTORS
The Corporation's articles of incorporation and bylaws currently
provide that each of the Corporation's directors is elected to serve for a term
of one year. Patron's certificate of incorporation, which will govern the
surviving corporation after the Merger, provides that commencing with the 2002
annual meeting of stockholders (or at the effective time of a written consent in
lieu thereof), the board of directors is to be divided into three classes which
shall be as nearly equal in number as possible. The initial term of each class
of directors shall expire at the annual meeting of stockholders to be held in
the following years: Class I - 2003; Class II - 2004; and Class III - 2005. At
each annual meeting of stockholders after the 2002 annual meeting of
stockholders, the successors to the class of directors whose term shall then
expire shall be identified as being of the same class of directors they succeed
and shall be elected to hold office for a term expiring at the third succeeding
annual meeting of stockholders. When the number of directors is changed, any
newly-created directorships or any decrease in directorships shall be so
apportioned among the classes by the board of directors as to make all classes
as nearly equal in number as possible; provided, however, that no decrease in
the number of directors shall shorten or terminate the term of any incumbent
director. Each director shall serve until his successor is elected and
qualified.
A classified board of directors could make it more difficult for
stockholders, including those holding a majority of the surviving corporation's
outstanding stock, to force an immediate change in the composition of a majority
of the board of directors. Since the terms of only one-third of the incumbent
directors expire each year, it requires at least two annual elections for the
stockholders to change a majority, whereas a majority of a non-classified board
of directors may be changed in one year. In the absence of the provisions of
Patron's certificate of incorporation classifying the board of directors, all of
the directors would be elected each year. The provision for a staggered board of
directors affects every election of directors and is not triggered by the
occurrence of a particular event such as a hostile takeover. Thus, a staggered
board of directors makes it more difficult for stockholders to change the
majority of directors even when the reason for the change would be unrelated to
a takeover.
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CONVERSION OF COMMON STOCK; EXCHANGE OF STOCK CERTIFICATES.
On the Effective Date, the corporate existence of the Corporation will
cease and each share of Common Stock issued and outstanding immediately prior to
the Merger will be converted automatically into one share of Patron common
stock.
The Corporation anticipates that its transfer agent will serve as its
exchange agent (the "Exchange Agent") to act for holders of Common Stock in
implementing the exchange of their certificates.
As soon as practicable after the Effective Date, stockholders will be
notified and requested to surrender their certificates representing shares of
Common Stock to the Exchange Agent in exchange for certificates representing
Patron common stock. One share of Patron common stock will be issued in exchange
for each issued and outstanding share of Common Stock. Unless and until
surrendered, each certificate representing Common Stock will be deemed to
represent the same number of shares of Patron common stock.
DO NOT SEND IN ANY OF YOUR STOCK CERTIFICATES REPRESENTING SHARES OF
COMMON STOCK UNTIL SUCH TIME AS SURRENDER OF THE COMMON STOCK IS REQUIRED.
DELIVERY OF CORPORATION STOCK CERTIFICATES WILL CONSTITUTE DELIVERY FOR
TRANSACTIONS IN SHARES OF PATRON COMMON STOCK AFTER THE EFFECTIVE DATE OF THE
MERGER. FOLLOWING CONSUMMATION OF THE MERGER, POSITIONS IN SHARES OF THE COMMON
STOCK HELD WITH THE DEPOSITORY TRUST COMPANY WILL BE TRANSFERRED AUTOMATICALLY
TO POSITIONS IN THE SAME NUMBER OF SHARES OF PATRON COMMON STOCK.
APPROVALS.
A Certificate of Merger must be filed with the State of Delaware and
Articles of Merger must be filed with the state of Nevada to effect the Merger.
Except for these filings and certain filings with the Securities and Exchange
Commission to recognize Patron as a successor to the Corporation, no federal or
state regulatory requirements apply and no governmental approvals are required
in connection with the Merger.
ADDRESSES OF THE CORPORATION AND PATRON.
Following the Merger, the mailing address for Patron, as the surviving
corporation will be: 311 Belle Foret Drive, Suite 150, Lake Bluff, Illinois
60044. The phone number for Patron, as the surviving corporation, will be
847-295-7338.
COMPARISON OF RIGHTS UNDER NEVADA AND DELAWARE LAW AND CHARTER AND BYLAWS OF THE
CORPORATION AND PATRON.
The Merger will result in changes to your rights as a stockholder due
to differences between Nevada and Delaware corporate laws and differences
between the governing documents of Nevada and Delaware corporations. Attached as
Exhibits B and C are the Second Amended and Restated Certificate of
Incorporation and the Amended and Restated Bylaws of Patron, which will survive
the Merger.
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After the Merger, the former stockholders of the Corporation, a Nevada
corporation, will become stockholders of Patron, a Delaware corporation. The
rights of Patron stockholders are governed by its certificate of incorporation,
its bylaws and the Delaware General Corporation Law (the "DGCL.") The rights of
the Corporation's stockholders are governed by its articles of incorporation,
its bylaws and the Nevada Revised Statutes (the "NRS"). Upon completion of the
Merger, the rights of the Corporation stockholders who become Patron
stockholders will be governed by the certificate of incorporation and bylaws of
Patron and the DGCL.
Although Nevada and Delaware corporate laws are substantially the same
in many respects, there are some differences between the laws of the two states.
It would be impracticable to state all of the differences; however, the
following is a summary of certain significant differences between such laws and
the differences between the Corporation's existing corporate documents and the
Second Amended and Restated Certificate of Incorporation and the Amended and
Restated Bylaws of Patron:
CLASSIFICATION OF COMMON STOCK
The common stock of Patron is not divided into separate classes or
series. The common stock of the Corporation is not divided into separate classes
or series.
VOTING
Each Patron stockholder has the right to one vote for each share of
common stock held by the stockholder. Each stockholder of the Corporation has
the right to one vote for each share of common stock held by the stockholder.
SPECIAL MEETING OF STOCKHOLDERS
Under the DGCL, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the bylaws. The Patron bylaws provide that special meetings
of the stockholders may be called only by the chairman of the board, if any, or
pursuant to a resolution approved by a majority of the whole board of directors
or by a committee of the board of directors authorized to call such meetings and
by no other person.
The NRS is silent as to who may call a special meeting of stockholders.
The bylaws of the Corporation provide that special meetings of the stockholders
may be called by the president or by the board of directors, and shall be called
by the president at the written request of the holders of 10% of the issued and
outstanding capital stock of the Corporation.
RECORD DATE FOR DETERMINING STOCKHOLDERS
The Patron bylaws provide that the board of directors may fix a record
date which:
o in the case of determination of stockholders entitled to notice of or
to vote at any meeting of stockholders or adjournment of any meeting,
shall not be more than 60 nor less than 10 days before the date of the
meeting; and
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o in the case of any other action, shall not be more than 60 days prior
to the action.
The NRS provides that the board of directors may prescribe a period not
exceeding 60 days or fix a record date which shall not be more than 60 or less
than 10 days prior to the date of any meeting of the stockholders, during which
period no transfer of stocks on the books of the corporation may be made because
the date as of which stockholders entitled to notice of and to vote at that
meeting must be determined.
The Patron bylaws provide that if the board of directors does not fix a
record date in the manner described above, then:
o the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; and
o the record date for determining stockholders for any other purpose
shall be at the close of business on the same day on which the board of
directors adopts the related resolution.
The NRS provides that if the board of directors does not fix a record
date in the manner described above, then the record date for determining
stockholders entitled to notice of and to vote at a meeting of stockholders
shall be at the close of business on the day before the day on which notice is
given to the stockholders.
ELECTION OF DIRECTORS
Subject to the rights of holders of the preferred stock, if any, the
holders of Patron common stock elect all members of Patron's board of directors;
there is no series vote.
The holders of the Common Stock elect all members of the Corporation's
board of directors; there is no series vote.
NUMBER OF DIRECTORS
Both the DGCL and the NRS provide that the board of directors must
consist of at least one director, with the corporation having the option of
specifying a fixed or a variable number of directors within a fixed range. The
Patron bylaws provide that the board of directors shall initially consist of
three directors. Thereafter, the number of directors may be amended from time to
time by resolution adopted by affirmative vote of a majority of the whole board
of directors; provided that no such amendment may shorten the term of any
incumbent director. The Patron certificate of incorporation provides that the
directors, other than those who may be elected by the holders of preferred
stock, shall be divided into three classes, as nearly equal in number as
possible, and designated as Class I, Class II and Class III. The articles of
incorporation and bylaws of the Corporation provide that the board of directors
shall consist of no less than one director. Thereafter, the number of directors
may be amended from time to time by resolution adopted by affirmative vote of a
majority of the whole board of directors.
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REMOVAL OF DIRECTORS
The DGCL provides that for corporations such as Patron which have a
classified board of directors, any director or the entire board may be removed,
but only with cause, unless the certificate of incorporation provides otherwise.
The Patron certificate of incorporation provides that any director may be
removed at any time, but only for cause and only by the affirmative vote of the
holders of at least 50 percent of the voting power of the then outstanding
voting stock, voting together as a single class.
The NRS provides that any director or one or more of the incumbent
directors may be removed from office by the vote of stockholders representing
not less than two-thirds of the voting power of the issued and outstanding stock
entitled to vote. The articles of incorporation and bylaws of the Corporation do
not specifically provide for the removal of directors.
BOARD OF DIRECTORS VACANCIES
Under the DGCL, vacancies and newly created directorships may be filled
by a majority of the directors then in office, even though less than a quorum,
unless (1) otherwise provided in the certificate of incorporation or bylaws of
the corporation or (2) the certificate of incorporation directs that a
particular class is to elect the director, in which case any other directors
elected by the class, or a sole remaining director, may fill the vacancy. The
Patron certificate of incorporation states that subject to the rights of the
holders of any preferred stock to fill any newly created directorships or
vacancies, any vacancy may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
The NRS provides that all vacancies, including those caused by an
increase in the number of directors, may be filled by a majority of the
remaining directors, though less than a quorum, unless it is otherwise provided
in the articles of incorporation. The bylaws of the Corporation further provide
that vacancies on the board of directors may be filled by the stockholders at
any regular or special meeting, or at any adjourned meeting thereof. In the
alternative, a majority of the remaining members of the board of directors may
elect a successor to hold office for the unexpired portion of the term of the
director whose place has become vacant and until his successor shall have been
elected and qualify.
SPECIAL MEETINGS OF THE BOARD OF DIRECTORS
The Patron bylaws provide that special meetings may be called by the
chairman of the board, if any, the president, the secretary, or by any member of
the board of directors. The bylaws require that notice of the meeting be given
by the person or persons calling the meeting at least twenty-four hours before
the special meeting is to take place.
The bylaws of the Corporation provide that the president or secretary
may call a special meeting of the board of directors. The bylaws require that at
least three days notice be given by mail or by telegraph.
BOARD ACTION - GENERALLY
The Patron certificate of incorporation provides that the board of
directors may lawfully take into account the long-term as well as short-term
interests of the corporation and its
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stockholders, as well as the interests of creditors, customers, employees and
other constituencies of the corporation and its subsidiaries. The Patron
certificate of incorporation also provides that a majority of the whole board of
directors shall constitute a quorum for the transaction of business. Board
action requires the vote of a majority of the directors present at a meeting at
which a quorum is present. The Patron bylaws further state that a director who
directly or indirectly is a party to a contract or transaction with the
corporation may be counted in determining whether a quorum is present at a board
meeting, and such director may participate in the meeting and vote on such
authorization to the extent permitted by applicable law, including Section 144
of the DGCL.
The bylaws of the Corporation provide that any and all business may be
transacted by any meeting of the board of directors. The NRS provides that the
act of directors holding a majority of the voting power of the directors,
present at a meeting at which a quorum is present, is the act of the board of
directors. Any action required or permitted to be taken at a meeting of the
board of directors may be taken without a meeting if, before or after the
action, a written consent to that action is signed by all the members of the
board.
BOARD ACTION - TRANSACTIONS WITH RELATED PARTIES
The Patron certificate of incorporation and bylaws do not contain any
provisions regarding transactions with related parties. The articles of
incorporation and bylaws of the Corporation do not contain any provisions
regarding transactions with related parties.
PREFERRED STOCK
The Patron certificate of incorporation authorizes the board of
directors to issue up to 75,000,000 shares of preferred stock in one or more
series and to fix the designations, preferences, powers and rights of the shares
to be included in each series. The articles of incorporation of the Corporation
do not authorize the issuance of any preferred stock.
The Patron certificate of incorporation provides that, except to the
extent otherwise provided in a preferred stock designation, the holders of
shares of the series shall have no voting rights or right to receive notice of
any meeting of stockholders at which they are not entitled to vote.
INDEMNIFICATION
The Patron certificate of incorporation provides that its directors and
officers shall be indemnified by the corporation in accordance with and pursuant
to the bylaws. The bylaws provide that the corporation will also indemnify those
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture or similar enterprise.
The Patron certificate of incorporation also provides that Patron may, by action
of its board of directors, indemnify employees and other persons to the same
extent as directors and officers.
Neither the articles of incorporation nor the bylaws of the Corporation
provide indemnification for its directors and officers.
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Patron is not permitted to indemnify its officers or directors if the
expenses, liability and losses incurred are the result of the individual's
intentional misconduct, fraud or knowing violations of the law. The certificate
of incorporation of Patron also prevents indemnification for the payment of
dividends in violation of Section 174 of the DGCL.
Both the DGCL and NRS provide that a corporation shall indemnify the
expenses incurred by any director, officer, employee or agent that has been
successful on the merits or otherwise in defense of any action, suit or
proceeding. The DGCL and NRS further provide that indemnification may be made by
a corporation upon a determination that indemnification of a former or present
director, officer, employee or agent is proper because that person acted in good
faith and in a manner the person believed to be in or not opposed to the best
interest of the corporation. Under the DGCL, this determination must be made by:
o a majority vote of disinterested directors, even if less than a quorum;
o a committee of disinterested directors designated by a majority vote of
the disinterested directors, even if less than a quorum;
o independent legal counsel in a legal opinion if there are no
disinterested directors; or
o the stockholders.
Under the NRS, this determination must be made by:
o the stockholders;
o the board of directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
o by independent legal counsel in a written opinion of a majority vote if
a quorum consisting of directors who were not parties to the action,
suit or proceeding so orders; or
o by independent legal counsel in a written opinion if a quorum
consisting of directors who were not parties to the action, suit or
proceeding cannot be obtained.
LIMITATION ON LIABILITY
The DGCL permits corporations to adopt a provision in their certificate
of incorporation eliminating the liability of a director to the corporation or
its stockholders for monetary damages for breach of the director's fiduciary
duty of care. With certain exceptions, the NRS permits corporations to adopt
similar provisions in their articles of incorporation eliminating the liability
of a director to the corporation or its stockholders for monetary damages for
breach of the director's fiduciary duty. The Patron certificate of incorporation
provides that a director of Patron shall not be liable to Patron or any of its
stockholders for monetary damages for breach of fiduciary duty as a director.
The articles of incorporation of the Corporation contain a similar provision
limiting the prospective liability of directors.
DIVIDENDS/DISTRIBUTIONS
Subject to any restrictions contained in a corporation's certificate of
incorporation, the DGCL generally provides that a corporation may declare and
pay dividends out of surplus,
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defined as net assets minus stated capital, or, when no surplus exists, out of
net profits for the fiscal year in which the dividend is declared or for the
preceding fiscal year. Dividends may not be paid out of net profits if the
capital of the corporation is less than the amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets. The Patron certificate of incorporation contains no
restrictions on the declaration or payment of dividends.
The NRS provides that no distribution to stockholders may be made if
the corporation would not be able to pay its debts as they become due in the
usual course of business or the corporation's total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if the
corporation were to be dissolved at the time of distribution, to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
are superior to those receiving the distribution. A distribution to stockholders
under the NRS may be in the form of a declaration or payment of a dividend, a
purchase, redemption or other acquisition of shares, a distribution of
indebtedness or otherwise. The NRS provides that in declaring and paying
distributions, a director is fully protected in relying in good faith upon the
books of account of the corporation or statements prepared by any of its
officials as to the value and amount of the assets, liabilities or net profits
of the corporation, or any other facts pertinent to the existence and amount of
money from which distributions may properly be declared.
Neither the articles of incorporation nor the bylaws of the Corporation
contain any provisions with regard to distributions.
LIQUIDATION
Under the DGCL, a dissolution must be consented to in writing by
stockholders holding 100% of the total voting power or the dissolution must be
initiated by the board of directors and approved by the holders of a majority of
the outstanding voting shares of the corporation. Under the NRS, unless
otherwise provided in the corporation's articles of incorporation, stockholders
holding a majority of the total voting power may authorize a corporation's
dissolution.
Neither the certificate or articles of incorporation nor the bylaws of
either Patron or the Corporation contain provisions regarding liquidation.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION
Under both the DGCL and the NRS, unless the certificate or articles of
incorporation or bylaws provide otherwise, amendments to the certificate or
articles of incorporation generally require the approval of the holders of a
majority of the outstanding shares entitled to vote. The DGCL provides that if
any amendment would increase or decrease the number of authorized shares of any
class or series or the par value of such shares or would adversely affect the
shares of such class or series, a majority of the outstanding shares of that
class or series would have to approve the amendment. The NRS provides that if
any proposed amendment, including a proposed increase or decrease in the number
of authorized shares, would alter or change any preference or any relative or
other right given to any class or series of outstanding shares, then a majority
of the outstanding shares of the affected class or series would have to approve
the amendment.
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AMENDMENT OF BYLAWS
The DGCL provides that the stockholders entitled to vote shall have
the power to adopt, amend or repeal the bylaws of a corporation. The
Patron bylaws provide that the board of directors or stockholders holding
not less than 66 2/3% of the total voting power of the then outstanding
capital stock of Patron entitled to vote thereon may adopt, amend or
repeal the bylaws.
The bylaws of the Corporation provide that amendments and changes to
the bylaws may be made at any regular or special meeting of the Board of
Directors by a vote of not less than all of the entire Board, or may be made by
a vote of, or a consent in writing signed by the holders of 51% of the issued
and outstanding capital stock.
STOCKHOLDER VOTING WITH RESPECT TO MERGERS
Both the NRS and the DGCL generally require that a majority of the stockholders
of the merging corporations approve statutory mergers. The DGCL does not require
a stockholder vote of the surviving corporation in a merger, unless the
corporation provides otherwise in its certificate of incorporation, if:
o the merger agreement does not amend the existing certificate of
incorporation;
o each share of the corporation outstanding before the merger is an
identical outstanding or treasury share of the surviving corporation
after the merger; and
o the number of shares to be issued by the surviving corporation in the
merger does not exceed 20% of the shares of the corporation outstanding
immediately prior to the merger.
The NRS provides that the vote of the stockholders of a surviving
corporation on a plan of merger is not required if:
o the articles of incorporation of the surviving corporation will not
differ from the articles before the merger;
o each stockholder of the surviving corporation whose shares were
outstanding immediately before the effective date of the merger will
hold the same number of shares, with identical designations,
preferences, limitations and relative rights immediately after the
merger;
o the number of voting shares outstanding immediately after the merger,
plus the number of voting shares issued as a result of the merger,
either by the conversion of securities issued as a result of the merger
or the exercise of rights and warrants issued as a result of the
merger, will not exceed by more than 20% the total number of voting
shares of the surviving corporation outstanding immediately prior to
the merger; and
o the number of participating shares outstanding immediately after the
merger, plus the number of participating shares issuable as a result of
the merger, either by the conversion of securities issued as a result
of the merger or the exercise of rights and warrants issued as a result
of the merger, will not exceed by more than 20% the total number of
participating shares outstanding immediately prior to the merger.
12
The DGCL generally does not require class voting, except in certain
transactions involving an amendment to the certificate of incorporation which
adversely affects a specific class of shares. The NRS provides that separate
voting by class is required (1) on a plan of merger if the plan contains a
provision that, if contained in the proposed amendment to the articles of
incorporation, would entitle particular stockholders to vote as a class on the
proposed amendment or (2) on a plan of exchange by each class or series of
shares included in the exchange, with each class or series constituting a
separate voting class.
APPRAISAL AND DISSENTERS' RIGHTS
Under both the NRS and the DGCL, a stockholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal or dissenters' rights under which such
stockholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.
Under the DGCL, appraisal rights are not available:
o with respect to the sale, lease or exchange of all or substantially all
of the assets of a corporation;
o with respect to a merger or consolidation by a corporation the shares
of which are either listed on a national securities exchange or are
held of record by more than 2,000 holders if the stockholders receive
only shares of the surviving corporation or shares of any other
corporation which are either listed on a national securities exchange
or held of record by more than 2,000 holders, plus cash in lieu of
fractional shares; or
o to stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the
merger.
The NRS provides that dissenters' rights are not available with respect
to a merger or exchange by a corporation the shares of which are listed on a
national securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 holders unless the articles of incorporation of the corporation issuing
the shares provides otherwise or the holders of the class or series are required
under the plan of merger or exchange to accept for the shares anything other
than cash or owner's interests of the surviving entity or any other entity which
was either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders.
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
Sections 78.411 to 78.444 of the NRS prohibit a Nevada corporation from
engaging in certain "combinations" with any "interested stockholders." With
certain exceptions, an interested stockholder is a person or group who or which
owns 10% or more of the corporation's outstanding voting stock, including any
rights to acquire stock under an option, warrant, agreement, arrangement or
understanding, or upon the exercise of conversion or exchange rights,
13
and stock with respect to which the person has voting rights only, or is an
affiliate or associate of the corporation and was the owner of 10% or more of
the corporation's voting stock at any time within the previous three years. For
purposes of Sections 78.411 to 78.444, the term "combination" is defined broadly
to include:
o mergers or consolidations with the interested stockholder or any other
corporation which is, or after the merger or consolidation would be, an
affiliate or associate of the interested stockholder;
o sales or other dispositions to the interested stockholder, or any
affiliate or associate of the interested stockholder, of assets of the
corporation or a subsidiary equal to:
o 5% or more of the aggregate market value of the
corporation's consolidated assets or its outstanding stock; or
o 10% or more of the corporation's consolidated earning power
or net income;
o the issuance or transfer by the corporation or a subsidiary of stock of
the corporation or the subsidiary having an aggregate market value
equal to 5% or more of the aggregate outstanding stock of the
corporation to the interested stockholder, except for the exercise of
warrants or rights to purchase shares offered, or a dividend or
distribution paid or made, pro rata to all stockholders of the
corporation;
o the adoption of any plan or proposal for the liquidation or dissolution
of the corporation proposed by, or under agreement with, the interested
stockholder or any affiliate or associate of the interested
stockholder;
o a reclassification, recapitalization, merger, consolidation or other
similar transaction, whether or not with, proposed by or under
agreement with the interested stockholder, which has the effect of
increasing the proportionate share of the outstanding shares of any
class or series of the corporation's outstanding stock owned by the
interested stockholder or any affiliate or associate of the interested
stockholder, except for immaterial changes because of adjustments of
fractional shares; or
o receipt by the interested stockholder, except proportionately as a
stockholder, directly or indirectly, of any loans, advances,
guarantees, pledges or other financial benefits provided by or through
the corporation or a subsidiary.
Sections 78.411 to 78.444 prohibit combinations with an interested
stockholder for three years from the date of the interested stockholder's
acquisition of the shares of the corporation unless prior to the date on which
the person becomes an interested stockholder, the board of directors approves
the combination or the transaction which resulted in the person becoming an
interested stockholder.
Furthermore, sections 78.411 to 78.444 prohibit combinations with an
interested stockholder after the expiration of the three-year moratorium unless:
o the holders of stock representing a majority of the outstanding voting
power of the corporation not beneficially owned by the interested
stockholder proposing the combination, or any affiliate or associate of
the interested stockholder, approves the combination at a meeting
called for that purpose no earlier than three years after the
interested stockholder's date of acquiring the shares; or
14
o the aggregate amount of cash and the market value, as of the date of
the consummation of the combination, of the consideration other than
cash to be received per share by all of the holders of common stock not
beneficially owned by the interested stockholder is at least equal to
the higher of:
o the highest price per share paid by the interested
stockholder, at a time when he was the beneficial owner of 5% or more
of the outstanding voting stock of the corporation, for any common
shares of the same class or series acquired by him within three years
immediately before the date of the announcement with respect to the
combination or within three years immediately before the transaction in
which he became an interested stockholder, whichever is higher, plus
compounded interest; or
o the market value per share of common stock on the date of
the announcement with respect to the combination or the interested
stockholder's date of acquiring shares, whichever is higher, plus
compounded interest; and
o the aggregate amount of cash and the market value, as of the date of
the consummation of the combination, of the consideration other than
cash to be received per share by all of the holders of shares other
than common stock not beneficially owned by the interested stockholder
is at least equal to the higher of:
o the highest price per share paid by the interested
stockholder, at a time when he was the beneficial owner of 5% or more
of the outstanding voting stock of the corporation, for any common
shares of the same class or series acquired by him within three years
immediately before the date of the announcement with respect to the
combination or within three years immediately before the transaction in
which he became an interested stockholder, whichever is higher, plus
compounded interest;
o the highest preferential amount per share to which the
holders of shares of the class or series of shares are entitled in the
event of any voluntary liquidation, dissolution or winding up of the
corporation, plus the aggregate amount of any dividends declared or due
to which the holders are entitled before payment on another class or
series of shares; or
o the market value per share of the class or series of stock
on the date of the announcement with respect to the combination or the
interested stockholder's date of acquiring shares, whichever is higher,
plus compounded interest.
Although Nevada corporations may elect to opt out of sections 78.411 to
78.444 of the NRS by amending their articles of incorporation, such amendment
would not be effective until 18 months after the stockholder vote approving it.
The Corporation has not made such an election and is therefore subject to these
provisions.
Sections 78.378 and 78.379 of the NRS further regulate tender offers
and business combinations involving Nevada corporations by providing that any
acquisition by a person, either directly or indirectly, of ownership of, or the
power to direct the voting of 20% or more of the outstanding voting securities
("Control Shares") of a corporation is an "Acquisition of a Controlling
Interest." Before the Control Shares may be voted, such an acquisition must be
approved by the holders of a majority of the voting power of the corporation,
excluding those shares as to which any interested stockholder exercises voting
rights, or, if the acquisition will result in any change of a preference or any
relative or other right given to any class or series of outstanding shares, then
it must be approved by the holders of a majority of each class or series
15
affected, excluding those shares as to which any interested stockholder
exercises voting rights. A special meeting of stockholders must be held by the
corporation to approve an Acquisition of a Controlling Interest within 50 days
after a request for such meeting is submitted by the person seeking to acquire
control. If the Control Shares are accorded full voting rights and the acquiring
person has acquired Control Shares with a majority or more of the voting power
of the corporation, all stockholders who have not voted in favor of granting
full voting rights to the Control Shares have dissenters' rights. The NRS
further provides that a corporation may opt out of the Acquisition of a
Controlling Interest protections by expressly specifying in its articles of
incorporation or bylaws that these provisions do not apply (which provision must
be in effect on the tenth day following the acquisition). The Corporation has
not amended its bylaws to provide that the foregoing protections do not apply to
it.
Section 203 of the DGCL prohibits a Delaware corporation from engaging
in a "business combination" with an "interested stockholder" for three years
following the date that the person becomes an interested stockholder. With
certain exceptions, an interested stockholder is a person or group who or which
owns 15% or more of the corporation's outstanding voting stock, including any
rights to acquire stock under an option, warrant, agreement, arrangement or
understanding, or upon the exercise of conversion or exchange rights, and stock
with respect to which the person has voting rights only, or is an affiliate or
associate of the corporation and was the owner of 15% or more of the
corporation's voting stock at any time within the previous three years. For
purposes of Section 203, the term "business combination" is defined broadly to
include:
o mergers with or caused by the interested stockholder;
o sales or other dispositions to the interested stockholder, except
proportionately with the corporation's other stockholders, of assets of
the corporation or a subsidiary equal to 10% or more of the aggregate
market value of the corporation's consolidated assets or its
outstanding stock;
o the issuance or transfer by the corporation or a subsidiary of stock of
the corporation or the subsidiary to the interested stockholder, except
for transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested
stockholder's proportionate ownership of any class or series of the
corporation's or the subsidiary's stock; or
o receipt by the interested stockholder, except proportionately as a
stockholder, directly or indirectly, of any loans, advances,
guarantees, pledges or other financial benefits provided by or through
the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section 203 does
not apply if:
o prior to the date on which the person becomes an interested stockholder
the board of directors approves either the business combination or the
transaction which resulted in the person becoming an interested
stockholder;
o the interested stockholder owns 85% of the corporation's voting stock
upon consummation of the transaction which made him an interested
stockholder, excluding from the 85% calculation shares owned by
directors who are also officers of the target corporation and shares
held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer; or
16
o on or after the date the person becomes an interested stockholder, the
board approves the business combination and it is also approved at a
stockholder meeting by 66 2/3% of the voting stock not owned by the
interested stockholder.
Section 203 only applies to Delaware corporations which have a class of
voting stock that is listed on a national securities exchange, are quoted on an
interdealer quotation system such as The Nasdaq National Market or are held of
record by more than 2,000 stockholders. A Delaware corporation may elect not to
be governed by Section 203 by a provision in its original certificate of
incorporation or an amendment to the certificate or to the bylaws, which
amendment must be approved by majority stockholder vote and may not be further
amended by the board of directors. The certificate of incorporation of Patron
does not contain any provision evidencing an election not to be governed by
Section 203. However, Patron could choose to amend its certificate of
incorporation or bylaws in the future and elect not to be governed by Section
203.
INSPECTION OF STOCKHOLDERS' LIST
The DGCL allows any stockholder to inspect the stockholders' list for a
purpose reasonably related to that person's interest as a stockholder, upon
written demand under oath stating the purpose of the request. The NRS allows any
person who has been a stockholder for at least six months or who holds an
aggregate of 5% or more of the corporation's shares to inspect the stockholders'
list. The Patron bylaws allow any stockholder to inspect the stockholder list at
least 10 days prior to the annual meeting of stockholders. Neither the articles
of incorporation nor the bylaws of the Corporation contain provisions regarding
the inspection of the stockholders' list.
VOTE REQUIRED - ADOPTION OF PLAN OF MERGER.
On October 23, 2002, the outstanding voting securities of the
Corporation were 29,888,888 shares of Common Stock, par value $0.001 per share.
Each share of Common Stock held of record counted as one vote. A majority, or
14,944,445 votes, were required to adopt the Plan of Merger. 19,000,000 votes,
representing approximately 63.5% of the issued and outstanding Common Stock,
signed the consent of stockholders approving the Merger.
RIGHTS OF DISSENTING STOCKHOLDERS.
Any Corporation stockholder is entitled to be paid the fair value of
its shares in accordance with Section 92A.300 to 92A.500 of the NRS if the
stockholder dissents to the Merger. A brief summary of the provisions of NRS
Sections 92A.300 to 92A.500 is set forth below and the complete text of such
provisions is set forth in Exhibit D.
Because the Merger will be approved by the required vote of the
Corporation's stockholders effective twenty days from the mailing of this
Information Statement, each holder of shares of Common Stock who asserts
dissenters' rights and who follows the procedures set forth in Chapter 92A of
NRS, will be entitled to have his or her shares of Common Stock purchased by
Patron for cash at their fair market value. The fair market value of shares of
Common Stock will be determined as of the day before the first announcement of
the terms of the Merger, excluding any appreciation or depreciation in
consequence of the Merger.
17
A holder who wishes to exercise dissenters' rights must:
1. deliver to the Corporation written demand for payment of fair
value for his shares of Common Stock (see Form of "Dissenter's
Demand for Payment" attached hereto as Exhibit E);
2. have acquired beneficial ownership of the shares prior to
October 23, 2002, the date that the Merger was first announced
publicly; and
3. deposit his or her stock certificates with the Corporation at
311 Belle Foret Drive, Suite 150, Lake Bluff, Illinois 60044,
Attention: Corporate Secretary.
The written demand must be received by the Corporation, ON OR BEFORE
10:00 A.M. CENTRAL STANDARD TIME ON __________, 2003. Any stockholder who does
not follow the foregoing is not entitled to payment for his or her shares under
the NRS.
Within 30 days after receipt of a demand for payment, Patron shall pay
each dissenter who complied with the requirements set forth in the dissenter's
notice the amount it estimates to be the fair value of the stockholder's shares,
plus accrued interest (computed from the effective date of the action until the
date of payment). Payment must be accompanied by the Corporation's balance sheet
as of the end of a fiscal year ending not more than 16 months before the date of
payment, a statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available interim financial
statements, if any, along with a statement of the Corporation's estimate of the
fair value of the shares, an explanation how the interest was calculated, a
statement of the dissenter's rights to demand payment under NRS Section 92A.480
and a copy of NRS Sections 92A.300 through 92A.500.
Pursuant to NRS Section 92A.470, the Corporation may withhold payment
from a dissenter unless he was the beneficial owner of the shares before the
date set in the dissenter's notice. If the Corporation withholds payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The offer shall contain
a statement of its estimate of the fair value, an explanation of how the
interest was calculated, and a statement of dissenters' rights pursuant to NRS
Section 92A.480.
A dissenter may notify the Corporation in writing of his estimate of
the fair value of the shares and the amount of interest due and demand payment
of his estimate, less any payment made pursuant to NRS Section 92A.460, or
reject the offer made pursuant to NRS 92A.470 and demand payment of the fair
value of his shares and interest due. A dissenter waives his right to demand
payment unless he makes his demand in writing within 30 days after the
Corporation has made or offered payment for his shares.
If any demand for payment remains unsettled, the Corporation shall
commence a proceeding within 60 days of the dissenter's demand with the district
court in the County of Clark, State of Nevada (location of registered office),
petitioning the court to determine the fair value of the shares and accrued
interest. All dissenters whose demands
18
remain unsettled, whether or not residents of Nevada, shall be made parties to
the court action and shall be served with a copy of the petition. Nonresidents
may be served by registered or certified mail or by publication as provided by
law. If the Corporation does not so petition the court within this 60-day
period, it shall pay all unsettled demands. Each dissenter who is party to the
proceeding is entitled to a judgment:
o for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the Corporation; or
o for the fair value, plus accrued interest, of his after-acquired shares
for which the Corporation elected to withhold payment pursuant to NRS
Section 92A.470. The court shall assess costs pursuant to NRS Section
92A.500.
The foregoing summary does not purport to provide comprehensive
statements of the procedures to be followed by a dissenting stockholder who
seeks payment of the fair value of his shares of Common Stock. The NRS
establishes the procedures to be followed and failure to do so may result in the
loss of all dissenters' rights. Accordingly, each stockholder who might desire
to exercise dissenters' rights should carefully consider and comply with the
provisions of these sections, the full text of which is set out in Exhibit D to
this Information Statement and consult his or her legal advisor.
THE CORPORATION HAS RESERVED THE RIGHT TO ABANDON THE MERGER IF IT
DECIDES THAT THE NUMBER OF STOCKHOLDERS EXERCISING DISSENTERS' RIGHTS EXCEEDS AN
AMOUNT IT DEEMS ACCEPTABLE IN ITS SOLE AND ABSOLUTE DISCRETION.
Communications with respect to dissenters' rights should be addressed
to the Corporation at 311 Belle Foret Drive, Suite 150, Lake Bluff, Illinois
60044, attention: Corporate Secretary.
Upon filing a demand for payment a dissenting stockholder will cease to
have any of the rights of a stockholder except the right to be paid the fair
value of his Common Stock pursuant to the NRS. Stockholders holding shares not
represented by certificates will not be permitted to transfer their shares after
a demand for payment is filed. If a stockholder loses his dissenters' rights,
either by withdrawal of his demand, abandonment of the Merger by the Corporation
or otherwise, he will not have the right to receive a cash payment for his
Common Stock and will be reinstated to all of his rights as a stockholder as
they existed at the time of the filing of his demand.
THE PROVISIONS OF NRS SECTIONS 92A.300 TO 92A.500 ARE TECHNICAL AND
COMPLEX. ANY STOCKHOLDER WHO DESIRES TO EXERCISE RIGHTS TO DISSENT SHOULD
CONSULT LEGAL COUNSEL, BECAUSE FAILURE TO COMPLY STRICTLY WITH SUCH PROVISIONS
MAY LEAD TO A LOSS OF DISSENTERS' RIGHTS.
19
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Corporation and Patron intend and believe that, for federal income
tax purposes:
o the Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended;
o no gain or loss will be recognized by Corporation stockholders upon the
exchange of Common Stock for Patron common stock in the Merger;
o a stockholders' aggregate tax basis in Patron common stock after the Merger
will be the same as such holder's aggregate tax basis in the shares of the
Common Stock immediately prior to the Merger; and
o no gain or loss will be recognized by the Corporation or Patron as a
consequence of the Merger.
Neither the Corporation nor Patron has requested or intends to request
a ruling from the Internal Revenue Service or an opinion of counsel regarding
any tax consequences of the Merger.
THE DISCUSSION SET FORTH ABOVE CONCERNING CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. ALL
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO ANY FEDERAL, STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES APPLICABLE TO THEM WHICH COULD RESULT FROM THE
MERGER.
--------------------------------------------
BOARD OF DIRECTORS
AND MANAGEMENT
-------------------------------------------
In connection with the Merger, the directors of Patron will become the
directors of the Corporation. The Board and the management of the Corporation
after the Effective Time will be as follows:
PATRICK J. ALLIN - CLASS III DIRECTOR, CHIEF EXECUTIVE OFFICER, AGE 51
Until December of 2001, Mr. Allin was Co-Chairman and CEO of Encore Development,
a high end technology consultancy, where in a period of eighteen months he
profitably grew the company over three hundred percent from $8 to $30 million.
From 1996 to 2000, Mr. Allin was a Senior Consulting Partner at Price Waterhouse
(subsequently PricewaterhouseCoopers), where he was responsible for several
large practice areas, including the North American strategy practice, which he
grew from $156 to $350 million in twenty-four months. Post merger with Coopers &
Lybrand, Mr. Allin had COO and P&L responsibility for the merged $6 billion
global consulting practice. Throughout his tenure at PW/PWC Mr. Allin built and
managed their largest client relationship, from zero revenues to a $125 million
annual relationship. Mr. Allin was educated at the University of Toronto.
RICHARD G. BEGGS - CLASS II DIRECTOR, AGE 58
Mr. Beggs serves as Executive Vice President and Chief Administrative Officer
for Daiwa Securities America. Prior to joining Daiwa in 1995, Mr. Beggs was the
Managing Director and Chief Operating Officer of Kemper Clearing Corporation. He
has held several positions at
20
Security Pacific Bank/Bank of America, including President and CEO of the
Treasury Management Corporation, President and COO of Security Pacific
Securities Inc. and Managing Director of the Global Securities Services Group.
He has also held senior management positions at Donaldson, Lufkin and Jenrette
and at Salomon Brothers. Mr. Beggs graduated from Columbia University with a BA
in Economics and received an MBA in Finance from Fairleigh Dickinson University.
WARREN K.K. LUKE - CLASS II DIRECTOR, AGE 58
Mr. Luke serves as Chairman and Chief Executive Officer of Hawaii National Bank
and its parent, Hawaii National Bancshares, Inc. Mr. Luke, in addition to his
many activities in Hawaii and the Pacific, has also been an active member of a
number of regional and national institutions. Mr. Luke served three, three-year
terms as a director of the Federal Reserve Bank of San Francisco, including a
term as chair of its audit committee. He has served as a member of the Board of
Governors of the American Red Cross and the United Way of America and currently
serves as a member of the Asia Pacific Advisory Committee for the Harvard
Business School. A graduate of Babson College and the Harvard Graduate School of
Business, Mr. Luke's banking career spans over thirty years. His numerous
leadership positions in business and community affairs include: various
assignments with the American Bankers Association, chairman of the Pacific and
Asian Affairs Council, and directorships for the following organizations: the
Hawaii Chapter of the American Red Cross, the Chinese Chamber of Commerce of
Hawaii, the Hawaii Community Reinvestment Corporation, the Honolulu Academy of
Arts, the Land Use Research Foundation of Hawaii, Aloha Airlines, and membership
on the advisory council for the Korea Economic Institute of America in
Washington D.C.
ROBERT E. YAW II - CLASS I DIRECTOR, AGE 56
Mr. Yaw has been a founding principal shareholder and director of private
companies, including principal equity partnerships with Prudential Insurance
Company and New York Life Insurance Company. Prior thereto, Mr. Yaw founded
Salomon Brothers' Global Telecommunications Group. Mr. Yaw led Salomon Brothers'
creation of mortgage securitization. He was Chairman of that firm's New Products
Group and Director of Private Placements. Prior to founding the
Telecommunication Group, Mr. Yaw served on the staffs of Citigroup, the United
States Senate Republican Policy Committee, the United States Senate Foreign
Relations Committee, and the Presidential Commission on the Causes and
Prevention of Violent Crime. Mr. Yaw received his undergraduate education at
Bowdoin College and Clare College (Cambridge University), and his graduate legal
education at Georgetown University and the University of London.
MARIE MEISENBACH GRAUL - CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER, AGE
47
Prior to her employment with Patron, Ms. Graul was Senior Vice President and
Chief Financial Officer of NTE, Inc., a supply chain software company. From 1997
to 1999, Ms. Graul was the Vice President of Finance and CFO of Bernard
Technologies, Inc. From 1989 through 1997, she served as CFO and Treasurer for
Schwak, Inc., an international imaging technology company. Ms. Graul also worked
as a Vice President for J&W Seligman & Co., a Wall Street money management firm
from 1987 through 1989. Ms. Graul has an MBA from the University of Oklahoma and
a BA from Michigan State University.
21
BRETT NEWBOLD - CHIEF TECHNOLOGY OFFICER, PRESIDENT, TECHNOLOGY PRODUCTS GROUP,
AGE 50
Since 1999, Mr. Newbold has served as an executive consultant to Kleiner Perkins
Caufield & Byers and various software companies. Until 1999, Mr. Newbold was
President and Chief Operating Officer of OpenText Corporation (NASDAQ:OTEX)
where he was instrumental in tripling both revenue and increasing market
capitalization from $210 to $630 million during his two year tenure. Prior
thereto, Mr. Newbold served for eight years as Vice President of Research and
Development for Oracle Corporation where he had senior responsibility for the
selection and development of new technologies, reporting directly to its
Chairman, Mr. Ellison. Mr. Newbold was educated at the University of Washington.
He speaks fluent French and Spanish and possesses a working knowledge of German,
Italian, and Japanese.
RICHARD L. LINTING - PRESIDENT, SECURITY SERVICES GROUP, AGE 57
Mr. Linting has an extensive track record building consultancies, including
being the Lead Technology Partner and an Executive Committee Member at
Accenture, and building the consulting practices at Computer Sciences
Corporation and Digital Equipment Corporation. Most recently, as President of
Carreker Corporation (NASDAQ:CANI), a financial services-focused professional
services and products company, Mr. Linting increased revenue eight fold in three
years, successfully took the company public, and increased market value from $20
million to over $1 billion. Mr. Linting was educated at the University of Notre
Dame and the University of Chicago.
The Board, effective as of the Effective Date, will create as committees of the
Board, a Compensation Committee, Audit Committee and Corporate Governance
Committee. It is intended that Mr. Beggs will serve as Chairman of the
Compensation Committee and Mr. Luke will serve as Chairman of the Corporate
Governance Committee. The Corporation intends, post-Merger, to expand the size
of the Board, and as additional Board members are appointed, additional
independent directors are likely to join the committees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of October 23, 2002, by (i) each person (or group
of affiliated persons) who is known by the Corporation to beneficially own more
than 5% of the outstanding shares of its Common Stock, (ii) each director and
executive officer of the Corporation, and (iii) all executive officers and
directors of the Corporation as a group. As of October 23, 2002, there were
29,888,888 shares of Common Stock outstanding. Except as otherwise indicated,
the beneficial owners listed in the table have sole voting and investment power
with respect to the shares.
22
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
CERTAIN BENEFICIAL OWNERS OWNERSHIP CLASS
Name and Address of Beneficial Owner
Thomas Prousalis, P.L.L.C 1,500,000 5.02%(1)
1919 Pennsylvania Avenue, N.W., Suite 200
Washington, D.C. 20006
DIRECTORS AND EXECUTIVE OFFICERS
Jeff Spanier (former Director and President) 600,844 2.01%(2)
430 Plaza Real
Suite 275
Boca Raton, Florida 33432
Patrick J. Allin, Director and
Chief Executive Officer 7,500,000 20.91%(3)
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Warren K. K. Luke, Director 0 0.00%
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Richard G. Beggs, Director 0 0.00%
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Robert E. Yaw II, Director 7,750,000 25.93%(4)
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Marie Meisenbach Graul, Chief Financial Officer
and Treasurer 0 0.00%
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
----------
(1) Based on information contained in a Schedule 13D, dated October 18, 2002.
(2) Based on information contained in the Exchange Agreement.
(3) Based on information contained in a Schedule 13D, dated October 18, 2002,
6,250,000 shares are directly owned by Mr. Allin, with 1,250,000 shares
indirectly beneficially owned by him.
(4) Based on information contained in a Schedule 13D, dated October 19, 2002,
1,000,000 shares are directly owned by Mr. Yaw, with 6,750,000 shares indirectly
beneficially owned by him.
23
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
CERTAIN BENEFICIAL OWNERS OWNERSHIP CLASS
Brett Newbold, Chief Technology Officer,
President, Technology Products Group 5,000,000 16.73%(5)
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Richard L. Linting, President,
Security Services Group 1,500,000 5.02%(6)
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
All directors and executive officers
as a group 22,300,844 74.78%
----------
(5) Based on information contained in a Schedule 13D, dated October 18, 2002,
2,400,000 shares are directly owned by Mr. Newbold, with 2,600,000 indirectly
beneficially owned by him.
(6) Based on information contained in a Schedule 13D,
dated October 18, 2002, 1,350,000 shares are owned by the Richard L. Linting
Trust and 150,000 shares are owned by the Richard L. Linting GST Trust, with all
such shares indirectly beneficially owned by Mr. Linting.
24
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth a summary, for the years ended December
31, 2001 and 2002, of the compensation of the Corporation's President for 2001
and through July 18, 2002, and its President from July 18, 2002 through October
11, 2002 and its newly elected Chief Executive Officer. The table also
summarizes compensation for two executive officers of the Corporation serving as
executive officers beginning on October 11, 2002 and one beginning on December
6, 2002. The six individuals identified in the Summary Compensation Table are
referred to as the "named executive officers" throughout this Information
Statement.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ ----------------------------------------
AWARDS PAYOUTS
-------------------------- ---------
Restricted Securities
Salary Bonus Other annual Stock underlying All other
($) ($) compensation Award(s) Options / SARs LTIP compensation
Name and Principal Position Year (1) (1) ($) ($) (#) Payouts ($)
--------------------------- ---- --------- --------- ------------ ---------- ------------- --------- ------------
Marc Baker ................. 2002 0 0 0 0 0 0 0
Sole Director and 2001 0 0 0 0 0 0 0
President (2)
Jeffrey Spanier ............ 2002 0 0 0 0 0 0 0
Sole Director and
President (3)
Patrick J. Allin ........... 2002 270,000 0 0 0 0 0 0
Chief Executive
Officer (4)
Marie Meisenbach Graul ..... 2002 20,833 0 0 0 400,000(6) 0 0
Chief Financial Officer
and Treasurer(5)
Brett Newbold .............. 2002 175,000 0 0 0 0 0 0
CTO, President -
Technology Products (7)
Richard L. Linting ......... 2002 175,000 0 0 0 1,000,000(9) 0 0
President - Security
Services (8)
25
(1) Amounts shown include cash compensation earned or to be earned by the named
executive officers for the nine-month period from April 2002 (when Patron was
formed) through December 2002, including amounts deferred at the election of
those officers. Bonuses are paid in April of the year following the year during
which they are earned.
(2) On February 27, 2001, the Corporation issued Mr. Baker 2,300,000 shares of
Common Stock. Mr. Baker tendered no consideration for the shares, but rather the
Board felt that such issuance was necessary to entice him to join the
Corporation based on his extensive experience with mergers and acquisitions. Mr.
Baker became the Corporation's sole director and officer. During his tenure with
the Corporation, Mr. Baker was issued an additional 2,200,000 shares of Common
Stock. On July 18, 2002, Mr. Baker resigned from his positions with the
Corporation and returned all 4,500,000 shares of Common Stock that he had
received.
(3) On July 18, 2002, Mr. Spanier was elected as a director and as President of
the Corporation. Mr. Spanier was issued 4,000,000 shares of Common Stock at this
time. Pursuant to the Exchange Agreement, and Mr. Spanier's employment agreement
with the Corporation, Mr. Spanier returned the 4,000,000 shares to the
Corporation in conjunction with his resignation as President of the Corporation.
These shares were subsequently cancelled.
(4) Mr. Allin became the Corporation's Chief Executive Officer on October 11,
2002.
(5) Ms. Graul became the Corporation's Chief Financial Officer and Treasurer on
December 6, 2002.
(6) Ms. Graul received, as of December 6, 2002, an option to purchase 400,000
shares of Common Stock at a per share exercise price of $2.05. Such option grant
represents 20% of the options granted to Patron employees prior to the date
hereof and such grant terminates on December 6, 2012.
(7) Mr. Newbold became the Corporation's Chief Technology Officer and President,
Technology Products Group on October 11, 2002.
(8) Mr. Linting became the Corporation's President, Security Services Group on
October 11, 2002.
(9) Mr. Linting received, as of May 1, 2002, an option to purchase 1,000,000
shares of the common stock of Patron at a per share exercise price of $0.01.
Such option grant represents 62.5% of the options granted to Patron employees
prior to the date hereof and such grant terminates on May 1, 2012. As part of
the Merger, Mr. Linting's options shall become exercisable for the shares of the
surviving corporation.
26
OPTION GRANTS IN FISCAL 2002
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL GRANT DATE
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION PRESENT
NAME GRANTED TO EMPLOYEES PRICE DATE VALUE (2)
---- ---------- --------------- -------- ---------- ----------
Marc Baker.................. 0 -- -- --
Jeffrey Spanier............. 0 -- -- --
Patrick J. Allin............ 0 -- -- --
Marie Meisenbach Graul...... 400,000 (1) 20% $2.05 12/6/12 [$_______]
Brett Newbold............... 0 -- -- --
Richard L. Linting.......... 1,000,000 (1) 62.5% $0.01 5/1/12 $ 0 (3)
(1) The stock options granted to Mr. Linting are options to purchase
1,000,000 shares of the common stock of Patron, while the stock options granted
to Ms. Graul are options to purchase 400,000 shares of the common stock of the
Corporation.
(2) The Black-Scholes option pricing model was chosen to estimate the
Grant Date Present Value of the options set forth in this table. The
Corporation's use of this model should not be construed as an endorsement of its
accuracy of valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the stock
price. The real value of the options in this table depends upon the actual
performance of the Corporation's common stock during the applicable period.
(3) The exercise price of such options was equal to fair market value
at the date of grant.
DIRECTOR COMPENSATION
During the 2001 and 2002 fiscal years, the Corporation's Directors did
not receive compensation for their services. The non-employee members of the
Corporation's Board in 2003 will receive (a) an initial option to purchase
200,000 shares of Common Stock, (b) subsequent annual grants currently estimated
to be 30,000 shares of common stock, (c) an annual fee of either $30,000 or a
grant of restricted stock in an amount equal to $45,000 and (d) reasonable fees
and expenses associated with Board participation.
EXECUTIVE EMPLOYMENT AGREEMENTS
As of October 2, 2002, Patrick J. Allin and Patron entered into an
employment agreement in connection with Mr. Allin's employment for a three year
term commencing on October 1, 2002, as the Chairman of the Board of Directors
and Chief Executive Officer of Patron.
27
Mr. Allin will receive a minimum annual base salary of $360,000 for the first
year of the employment term, $420,000 for the second year of the employment term
and $480,000 for the third year of the employment term. Mr. Allin is eligible to
receive (i) an annual bonus of 50-100% of his annual base salary if certain
financial performance measures are attained and (ii) such discretionary bonuses
as may be authorized by the Compensation Committee from time to time for
executive employees. Mr. Allin also is eligible to participate in stock option
and other employee benefit plans of Patron that may be in effect from time to
time.
If Mr. Allin's employment is terminated as a result of his death,
Patron will pay to Mr. Allin's estate his accrued but unpaid base salary, his
accrued but unused vacation and a pro rata annual bonus. If Mr. Allin's
employment is terminated because of his incapacity, Patron will pay to Mr. Allin
for not fewer than three years an annual disability benefit equal to 60% of the
sum of his base salary and annual bonus, reduced by amounts payable to Mr. Allin
under Patron's disability insurance policy. If Mr. Allin's employment is
terminated by Patron for Cause (as defined in the employment agreement) or by
Mr. Allin without Good Reason (as defined in the employment agreement), Patron
will pay to Mr. Allin his accrued but unpaid base salary. If Mr. Allin's
employment is terminated by Patron without Cause or by Mr. Allin for Good
Reason, Patron will pay to Mr. Allin his accrued but unpaid base salary, a pro
rata annual bonus and all other accrued but unpaid amounts to which Mr. Allin is
entitled (including any pro rata performance incentive bonus and all accrued but
unused vacation). In addition, if in connection with such a termination Mr.
Allin signs a release of all claims against Patron, Patron will (i) pay to Mr.
Allin the maximum bonus that could have been paid to Mr. Allin under any
performance incentive bonus plan then in effect; (ii) for three years pay to Mr.
Allin his base salary plus an additional 10%, and an amount equal to the annual
bonus Mr. Allin received for the year prior to the year of the termination and
(iii) continue to provide Mr. Allin with health insurance coverage for the
remainder of the three year employment term and continue in effect for Mr.
Allin's benefit any directors' and officers' liability insurance covering his
period of employment. In the event that the three year employment term expires
without renewal, Patron will pay to Mr. Allin his accrued but unpaid base
salary, a pro rata annual bonus and all other accrued but unpaid amounts to
which Mr. Allin is entitled (including any pro rata performance incentive bonus
and all accrued but unused vacation). In addition, if in connection with such
expiration Mr. Allin signs a release of all claims against Patron, Patron will
(i) pay to Mr. Allin the maximum bonus that could have been paid to Mr. Allin
under any performance incentive bonus plan then in effect; (ii) for two years
pay to Mr. Allin his base salary plus an additional 10%, and an amount equal to
the annual bonus Mr. Allin received for the year prior to the year in which the
agreement expires and (iii) continue in effect for Mr. Allin's benefit any
directors' and officers' liability insurance covering his period of employment.
Mr. Allin agrees not to compete with Patron or solicit certain of
Patron's employees or clients for a period of two years after the termination of
his employment (three years in the event that Mr. Allin is receiving payments
and benefits due to the termination of his employment without Cause or for Good
Reason). If any termination payments under the agreement or other amounts
payable to Mr. Allin are subject to the "golden parachute" excise tax imposed
under Section 4999 of the Internal Revenue Code of 1986, as amended, Patron will
provide Mr. Allin with a gross-up payment in an amount sufficient to offset the
effects of such excise tax.
28
As of October 2, 2002, Brett Newbold and Patron entered into an
employment agreement in connection with Mr. Newbold's employment for a three
year term commencing on October 1, 2002, as the President of the Technology
Products Group of Patron. The terms of Mr. Newbold's employment agreement are
substantially similar to those described above for Mr. Allin except that Mr.
Newbold will receive a minimum annual base salary of $300,000 for the first year
of the employment term, $350,000 for the second year of the employment term and
$400,000 for the third year of the employment term.
As of October 2, 2002, Richard L. Linting and Patron entered into an
employment agreement in connection with Mr. Linting's employment for a three
year term commencing on October 1, 2002, as the President of the Securities
Services Group of Patron. The terms of Mr. Linting's employment agreement are
substantially similar to those described above for Mr. Allin except that Mr.
Linting will receive a minimum annual base salary of $300,000 for the first year
of the employment term, $350,000 for the second year of the employment term and
$400,000 for the third year of the employment term. As of May 1, 2002, Patron
granted to Mr. Linting a non-qualified option to purchase 1,000,000 shares of
its common stock, $.01 par value, with an exercise price equal to $.01 per
share. The option vests quarterly over three years, commencing on the date of
grant, in approximately equal installments, subject generally to Mr. Linting's
continued employment by Patron. The option expires on May 1, 2012. If Mr.
Linting's employment is terminated because of his death or incapacity, by Patron
without Cause (as defined in the employment agreement) or by Mr. Linting for
Good Reason (as defined in the employment agreement), the option will become
fully vested and thereafter may be exercised until the earlier of the third
annual anniversary of the date Mr. Linting's employment terminates and the
option's expiration date. If Mr. Linting's employment is terminated by Patron
for Cause, the option automatically will terminate. If Mr. Linting's employment
is terminated by Mr. Linting without Good Reason, the option will be exercisable
only to the extent then vested and thereafter may be exercised until the earlier
of the three month anniversary of the date Mr. Linting's employment terminates
and the option's expiration date. In the event that Mr. Linting's three year
employment term expires without renewal, the option will be exercisable only to
the extent then vested and thereafter may be exercised until the earlier of the
third annual anniversary of the date the term expires and the option's
expiration date.
As of December 6, 2002, Marie Meisenbach Graul and Patron entered into
an employment agreement in connection with Ms. Graul's employment for a three
year term commencing on December 6, 2002, as the Senior Vice President, Chief
Financial Officer and Treasurer of Patron. The terms of Ms. Graul's employment
agreement are substantially similar to those described above for Mr. Allin
except that (i) Ms. Graul will receive a minimum annual base salary of $250,000
during the employment term and (ii) Ms. Graul is eligible to receive an annual
bonus of up to 50% of her annual base salary if certain financial performance
measures are attained. As of December 6, 2002, Patron granted to Ms. Graul a
non-qualified option to purchase 400,000 shares of its common stock, $.01 par
value, with an exercise price equal to $2.05 per share. The option vests
quarterly over three years, commencing on the date of grant, in approximately
equal installments, subject generally to Ms. Graul's continued employment by
Patron. The option expires on December 6, 2012. If Ms. Graul's employment is
terminated because of her death or incapacity, by Patron without Cause (as
defined in the employment agreement) or by Ms. Graul for Good Reason (as defined
in the employment agreement), the option will become fully vested and thereafter
may be exercised until the earlier of the third annual anniversary of the date
Ms. Graul's employment terminates and the option's expiration date. If Ms.
Graul's employment is terminated by Patron for Cause, the option automatically
29
will terminate. If Ms. Graul's employment is terminated by Ms. Graul without
Good Reason, the option will be exercisable only to the extent then vested and
thereafter may be exercised until the earlier of the three month anniversary of
the date Ms. Graul's employment terminates and the option's expiration date. In
the event that Ms. Graul's three year employment term expires without renewal,
the option will be exercisable only to the extent then vested and thereafter may
be exercised until the earlier of the third annual anniversary of the date the
term expires and the option's expiration date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon its review of Forms 3, 4 and 5 submitted to it, the
Corporation is aware that (i) Warren K. K. Luke, a Director of the Corporation,
filed a Form 3 with respect to his election as Director on February __, 2003,
(ii) Richard G. Beggs, a Director of the Corporation, filed a Form 3 with
respect to his election as Director on February ___, 2003, (iii) Marie
Meisenbach Graul, an officer of the Corporation, filed a Form 3 with respect to
her election as an officer on February __, 2003, (iv) Robert E. Yaw II, a
Director and officer of the Corporation, has not timely filed a Form 3, (v) Jeff
Spanier, former Director and President of the Corporation, has not timely filed
a Form 3 with respect to shares of common stock acquired by him in July 2002 or
a Form 4 with respect to the change in his beneficial ownership as a result of
the Share Exchange, and (vi) Marc Baker, former Director and President of the
Corporation, has not timely filed a Form 4 with respect to the change in his
beneficial ownership as a result of his resignation as an officer and director
of the Corporation and related share forfeiture.
ADDITIONAL AND AVAILABLE INFORMATION
The Corporation is subject to the informational filing requirements of
the Securities Exchange Act of 1934, as amended, and, in accordance therewith,
is required to file periodic reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC") relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the SEC's regional offices located at 233
Broadway, New York, NY 10279 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Information regarding the public reference
facilities may be obtained form the SEC by telephoning 1-800-SEC-0330. The
Corporation's filings are also available to the public on the SEC's internet
site (http://www.sec.gov). Copies of such materials may also be obtained by mail
from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR PATRON NOT CONTAINED HEREIN AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED.
30
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Corporation under the
Exchange Act with the SEC are incorporated herein by reference:
(1) The Corporation's Quarterly Report on Form 10-QSB for the quarterly period
ended September 30, 2002 filed October 4, 2002;
(2) The Corporation's Current Report on Form 8-K/A filed October 11, 2002;
(3) The Corporation's Current Report on Form 8-K filed October 23, 2002;
(4) The Corporation's Current Report on Form 8-K filed October 25, 2002;
(5) The Corporation's Current Report on Form 8/A-K filed November 6, 2002;
(6) The Corporation's Current Report on Form 8-K filed November 22, 2002;
(7) The Corporation's Current Report on Form 8-K filed November 27, 2002;
and
(8) The Corporation's Current Report on Form 8/K-A filed December 11, 2002;
(9) The Corporation's Current Report on Form 8-K filed December 16, 2002;
(10) The Corporation's Quarterly Report on Form 10-QSB/A for the quarterly
period ended September 30, 2002 filed December 26, 2002;
(11) The Corporation's Current Report on Form 8-K filed January 16, 2003;
(12) The Corporation's Current Report on Form 8-K filed January 16, 2003.
(13) The Corporation's Current Report on Form 8-K filed January 28, 2003.
The Corporation will provide without charge to each person, including
any beneficial owner of such person, to whom a copy of this Information
Statement has been delivered, on written or oral request, a copy of any and all
of the documents referred to above that have been or may be incorporated by
reference herein other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference herein). Requests for such copies should
be directed to 311 Belle Foret Drive, Suite 150, Lake Bluff, Illinois 60044.
31
MISCELLANEOUS
The Corporation requests brokers, custodians, nominees and fiduciaries
to forward this Information Statement to the beneficial owners of the Common
Stock and the Corporation will reimburse such holders for their reasonable
expenses in connection therewith. Additional copies of this Information
Statement may be obtained at no charge from the Corporation's transfer agent.
By Order of the Board of Directors.
---------------------------
Robert E. Yaw II, Secretary
32
EXHIBIT LIST
Exhibit A Agreement and Plan of Merger between Patron
Holdings, Inc., a Nevada corporation
and Patron Systems, Inc., a Delaware
corporation.
Exhibit B Second Amended and Restated Certificate of
Incorporation of Patron Systems, Inc., a
Delaware corporation.
Exhibit C Amended and Restated Bylaws of Patron Systems,
Inc., a Delaware corporation.
Exhibit D Sections 92A.300 - 92A.500 of Nevada Revised
Statutes.
Exhibit E Dissenter's Demand for Payment.
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Plan of Merger") is
made as of this __ day of _________, 2003, in accordance with Section 92A.180 of
the Nevada Revised Statutes and Sections 251 and 252 of the Delaware General
Corporation Law, by and among Patron Systems, Inc., a Delaware corporation
("Patron"), and Patron Holdings, Inc., a Nevada corporation formerly known as
Combined Professional Services, Inc. (the "Company" and, together with Patron,
the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the Boards of Directors and stockholders of the
Constituent Corporations have approved and deem desirable the merger (the
"Merger") of the Company with and into Patron pursuant to the terms and
conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that
the merger of the Company with and into Patron shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended;
NOW THEREFORE, the Constituent Corporations agree that the
Company will be merged with and into Patron and that the plans, terms and
conditions of the Merger shall be as follows:
SECTION 1. GENERAL
1.1 The Merger. At the Effective Time (as defined in Section
1.7 hereof) of the Merger, the Company shall be merged with and into Patron with
Patron surviving such Merger (the "Surviving Corporation").
1.2 Name of Surviving Corporation. The name of the Surviving
Corporation following effectiveness of the Merger shall be Patron Systems, Inc.
1.3 Certificate of Incorporation and Bylaws. (a) Immediately
prior to the Effective Time, the Second Amended and Restated Certificate of
Incorporation of Patron shall be in the form attached as Exhibit A (the
"Certificate of Incorporation"), and such Certificate of Incorporation shall be
the Certificate of Incorporation of the Surviving Corporation after the
Effective Time unless and until amended in accordance with its terms and as
provided by law.
(b) Immediately prior to the Effective Time, the Amended and
Restated Bylaws of Patron shall be in the form attached as Exhibit B (as so
amended and restated, the "Bylaws"), and such Bylaws shall be the Bylaws of the
Surviving Corporation after the Effective Time unless and until amended in
accordance with their terms and the terms of the Certificate of Incorporation of
the Surviving Corporation and as provided by law.
1.4 Directors and Officers. The directors and officers of
Patron immediately prior to the Effective Time shall be the initial directors
and officers of the Surviving Corporation
after the Effective Time, each to hold office in accordance with the Certificate
of Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected and qualified.
1.5 Property and Liabilities of the Company. At the Effective
Time, the separate existence of the Company shall cease and the Company shall be
merged with and into Patron, the Surviving Corporation. The Surviving
Corporation shall, from and after the Effective Time, possess all the rights,
privileges, powers and franchises of whatsoever nature and description, of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of the Company; all rights, privileges, powers and
franchises of the Company, and all property, real, personal and mixed, of, and
debts due to, the Company on whatever account, including stock subscriptions and
all other things belonging to the Company shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all other interests of the Company shall be thereafter as effectually the
property of the Surviving Corporation as they were of the Company, and the title
to and any real estate vested by deed or otherwise in the Company shall not
revert or be in any way impaired by reason of the Merger. All rights of
creditors and all liens upon the property of the Company shall be preserved
unimpaired, and all debts, liabilities and duties of the Company shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it. Any claim existing or action or proceeding, whether civil,
criminal or administrative, pending by or against the Company may be prosecuted
to judgment or decree as if the Merger had not taken place, or the Surviving
Corporation may be substituted in such action or proceeding.
1.6 Further Assurances. Each Constituent Corporation agrees
that at any time, or from time to time, as and when requested by the Surviving
Corporation, or by its successors and assigns, such Constituent Corporation will
execute and deliver, or cause to be executed and delivered in its name by its
last acting officers, or by the corresponding officers of the Surviving
Corporation, all such conveyances, assignments, transfers, deeds or other
instruments, and will take or cause to be taken such further or other action as
the Surviving Corporation, its successors or assigns may deem necessary or
desirable in order to evidence the transfer, vesting or devolution of any
property, right, privilege or franchise or to vest or perfect in or confirm to
the Surviving Corporation, its successors and assigns, title to and possession
of all the property, rights, privileges, powers, franchises and interests
referred to in this Section 1 and otherwise to carry out the intent and purposes
hereof.
1.7 Effective Time. This Plan of Merger shall become effective
in accordance with and at the time of the filing of the Articles of Merger with
the Secretary of State of the State of Nevada and the filing of a Certificate of
Merger with the Secretary of the State of Delaware (the "Effective Time").
2
SECTION 2. CONVERSION OF SHARES; DETERMINATION OF PURCHASE PRICE
As of the Effective Time, by virtue of the Merger and without
any action on the part of any stockholder of Patron or the Company:
2.1 Patron Common Stock. The issued and outstanding shares of
common stock, par value $.01 per share, of Patron (the "Patron Stock") shall be
cancelled and retired; and
2.2 Company Common Stock. (a) Each share of common stock, par
value $0.001 per share, of the Company (the "Company Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one (1) fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation (the "Surviving Corporation
Stock").
(b) All shares of the Company Stock, when so converted as
provided in Section 2.2(a), shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate
theretofore representing any such shares shall cease to have any rights with
respect thereto, except the right to receive, upon the surrender of such
certificate in accordance with Section 3, those shares of Surviving Corporation
Stock issuable in respect of the conversion of such shares of the Company Stock.
(c) Notwithstanding anything to the contrary in this Plan of
Merger, each stockholder of the Company, by virtue of such stockholder's
execution and delivery of a written consent dated the date hereof approving the
Merger and this Plan of Merger, has waived any and all rights that such
stockholder might otherwise have to dissent from the Merger and this Plan of
Merger and to demand appraisal for such stockholder's shares of the Company
Stock.
SECTION 3. PATRON TO MAKE CERTIFICATES AVAILABLE.
3.1 Surrender of the Company Stock. Upon surrender by a holder
of certificates representing shares of the Company Stock ("Certificates") held
by such holder to the Surviving Corporation, together with properly completed
and executed assignments separate from the Certificates, the Surviving
Corporation shall promptly deliver to such holder Certificates for the shares of
Surviving Corporation Stock that such holder shall be entitled to under Section
2.2(a). Until a holder receives such Certificates, each certificate that, before
the Effective Time, represented shares of the Company Stock, shall be deemed
from and after the Effective Time, for all corporate purposes, to evidence the
number of shares of Surviving Corporation Stock held by such holder as a result
of the Merger.
SECTION 4. NO FURTHER OWNERSHIP RIGHTS IN PATRON STOCK. All
shares of Surviving Corporation Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof shall be deemed to have been
paid or be payable in full satisfaction of all rights of ownership, including
voting rights, pertaining to the shares of the Company Stock.
SECTION 5. CLOSING OF COMPANY TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of the Company
3
Stock shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged as
provided in Section 3.
SECTION 6. MISCELLANEOUS
(a) Counterparts. This Plan of Merger may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which taken together shall constitute one Plan of Merger.
* * * * * * * *
4
IN WITNESS WHEREOF, the Constituent Corporations have caused
this Plan of Merger to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
PATRON SYSTEMS, INC.,
a Delaware corporation
By: _____________________________
Name:
Title:
PATRON HOLDINGS, INC.,
a Nevada corporation
By: _____________________________
Name:
Title:
Signature Page to the Agreement and Plan of Merger
by and among
Patron Systems, Inc., a Delaware corporation
and
Patron Holdings, Inc., a Nevada corporation
5
EXHIBIT B
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PATRON SYSTEMS, INC.
PATRON SYSTEMS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: The original Certificate of Incorporation of PATRON
SYSTEMS, INC. was filed on April 30, 2002 and the Amended and Restated
Certificate of Incorporation of PATRON SYSTEMS, INC. was filed on October 10,
2002.
SECOND: The Second Amended and Restated Certificate of
Incorporation of PATRON SYSTEMS, INC. in the form attached hereto as Exhibit A
has been duly adopted in accordance with the provisions of Sections 245 and 242
of the General Corporation Law of the State of Delaware by the directors and
stockholders of the Corporation.
THIRD: The Second Amended and Restated Certificate of
Incorporation so adopted reads in full as set forth in Exhibit A attached hereto
and is incorporated herein by this reference.
IN WITNESS WHEREOF, PATRON SYSTEMS, INC. has caused this
Certificate to be signed by its Chief Executive Officer this 20th day of
February, 2003.
PATRON SYSTEMS, INC.
----------------------------
Name: Patrick J. Allin
Title: Chief Executive Officer
EXHIBIT A
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PATRON SYSTEMS, INC.
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"CORPORATION") is:
PATRON SYSTEMS, INC.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
(A) Authorized Capital Stock. The total number of shares of capital
stock which the Corporation shall have authority to issue is 225,000,000,
consisting of 150,000,000 shares of common stock, with the par value of $0.01
per share ("COMMON STOCK"), and 75,000,000 shares of preferred stock, with the
par value of $0.01 per share ("PREFERRED STOCK").
(B) Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is hereby authorized to
create and provide for the issuance of shares of Preferred Stock in series and,
by filing a certificate pursuant to the applicable law of the State of Delaware
(hereinafter referred to as a "PREFERRED STOCK DESIGNATION"), to establish from
time to time the number of shares to be included in each such series, and to fix
the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
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(i) The designation of the series, which may be by
distinguishing number, letter or title;
(ii) The number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise provided in
the Preferred Stock Designation) increase or decrease (but not below
the number of shares thereof then outstanding);
(iii) Whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series;
(iv) The dates at which dividends, if any, shall be payable;
(v) The redemption rights and price or prices, if any, for
shares of the series;
(vi) The terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
(vii) The amounts payable on, and the preferences, if any, of
shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation;
(viii) Whether the shares of the series shall be convertible
into shares of any other class or series, or any other security, of the
Corporation or any other corporation, and, if so, the specification of
such other class or series of such other security, the conversion price
or prices or rate or rates, any adjustments thereof, the date or dates
at which such shares shall be convertible and all other terms and
conditions upon which such conversion may be made;
(ix) Restrictions on the issuance of shares of the same series
or of any other class or series;
(x) The voting rights, if any, of the holders of shares of the
series; and
(xi) Such other powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof as the Board of
Directors shall determine.
(C) Common Stock. The Common Stock shall be subject to the express
terms of the Preferred Stock and any series thereof. Each share of Common Stock
shall be equal to each other share of Common Stock. The holders of shares of
Common Stock shall be entitled to one vote for each such share upon all
questions presented to the stockholders.
(D) Vote. Except as may be provided in this Certificate of
Incorporation or in a Preferred Stock Designation, or as may be required by
applicable law, the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, and
3
holders of shares of Preferred Stock shall not be entitled to receive notice of
any meeting of stockholders at which they are not entitled to vote.
(E) Record Holders. The Corporation shall be entitled to treat the
person in whose name any share of its stock is registered on the stock transfer
books of the Corporation as the owner thereof for all purposes and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
on the part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.
ARTICLE V
The Board of Directors is hereby authorized to create and issue,
whether or not in connection with the issuance and sale of any of its stock or
other securities or property, rights entitling the holders thereof to purchase
from the Corporation shares of stock or other securities of the Corporation or
any other corporation. The times at which and the terms upon which such rights
are to be issued will be determined by the Board of Directors and set forth in
the contracts or instruments that evidence such rights. The authority of the
Board of Directors with respect to such rights shall include, but not be limited
to, determination of the following:
(A) The initial purchase price per share or other unit of the stock or
other securities or property to be purchased upon exercise of such rights;
(B) Provisions relating to the times at which and the circumstances
under which such rights may be exercised or sold or otherwise transferred,
either together with or separately from, any other stock or other securities of
the Corporation;
(C) Provisions which adjust the number or exercise price of such rights
or amount or nature of the stock or other securities or property receivable upon
exercise of such rights in the event of a combination, split or recapitalization
of any stock of the Corporation, a change in ownership of the Corporation's
stock or other securities or a reorganization, merger, consolidation, sale of
assets or other occurrence relating to the Corporation or any stock of the
Corporation, and provisions restricting the ability of the Corporation to enter
into any such transaction absent an assumption by the other party or parties
thereto of the obligations of the Corporation under such rights;
(D) Provisions which deny the holder of a specified percentage of the
outstanding stock or other securities of the Corporation the right to exercise
such rights and/or cause the rights held by such holder to become void;
(E) Provisions which permit the Corporation to redeem or exchange such
rights; and
(F) The appointment of a rights agent with respect to such rights.
ARTICLE VI
(A) In furtherance and not in limitation of the powers conferred by
law, the Board of Directors is expressly authorized and empowered:
4
(i) to adopt, amend or repeal the Bylaws of the Corporation,
provided, however, that the Bylaws may also be altered, amended or
repealed by the affirmative vote of the holders of at least 66 2/3
percent of the voting power of the then outstanding Voting Stock (as
defined in Article VIII below), voting together as a single class; and
(ii) from time to time to determine whether and to what
extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation, or any of them,
shall be open to inspection of stockholders; and, except as so
determined, or as expressly provided in this Certificate of
Incorporation or in any Preferred Stock Designation, no stockholder
shall have any right to inspect any account, book or document of the
Corporation other than such rights as may be conferred by applicable
law.
(B) In addition to any other considerations which the Board of
Directors may lawfully take into account, in determining whether to take or to
refrain from taking corporate action on any matter, including proposing any
matter to the stockholders of the Corporation, the Board of Directors may take
into account the long-term as well as short-term interests of the Corporation
and its stockholders (including the possibility that these interests may be best
served by the continued independence of the Corporation), and the interests of
creditors, customers, employees and other constituencies of the Corporation and
its subsidiaries, including the effect upon communities in which the Corporation
and its subsidiaries do business.
(C) The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by law.
ARTICLE VII
Effective from and after the date upon which the Corporation shall be
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specific
circumstances or to consent to specific actions taken by the Corporation, any
action required or permitted to be taken by the stockholders of the Corporation
must be effected at a duly called annual or special meeting of stockholders of
the Corporation and may not be effected by any consent in writing in lieu of a
meeting of such stockholders.
ARTICLE VIII
(A) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specific circumstances, the number of
directors that shall constitute the whole Board of Directors of the Corporation
shall be fixed in the manner prescribed in the Bylaws of the Corporation and may
be increased or decreased from time to time in such a manner as may be
prescribed by the Bylaws.
(B) Subject to the rights of the holders of any series of Preferred
Stock to fill any newly created directorships or vacancies, any vacancy on the
Board of Directors that results from
5
an increase in the number of directors or for any other reason may be
filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director.
(C) Unless and except to the extent that the Bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
(D) The directors, other than those who may be elected by the holders
of any series of Preferred Stock, shall be divided into three classes, as nearly
equal in number as possible, and designated as Class I, Class II and Class III.
Class I directors shall be initially elected for a term expiring at the 2003
annual meeting of stockholders, Class II directors shall be initially elected
for a term expiring at the 2004 annual meeting of stockholders, and Class III
directors shall be initially elected for a term expiring at the 2005 annual
meeting of stockholders. Members of each class shall hold office until their
successors are duly elected and qualified. At each succeeding annual meeting of
the stockholders of the Corporation, the successors of the class of directors
whose term expires at that meeting shall be elected by a plurality of the votes
of the shares of Voting Stock present in person or represented by proxy at such
meeting and entitled to vote on the election of directors and shall hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election, and until their successors are duly
elected and qualified, subject to death, resignation or removal from office.
(E) Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto, and such
directors shall not be divided into classes pursuant to this Article VIII unless
expressly provided by such terms.
(F) Subject to the rights of the holders of any series of Preferred
Stock, any director may be removed from office at any time, but only for cause
and only by the affirmative vote of the holders of at least 50 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class. For the purposes of this Certificate of Incorporation, "Voting Stock"
shall mean the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Any amendment or repeal of this Article IX by the
stockholders shall not adversely affect any right or protection of a director of
the Corporation existing hereunder in respect of any act or omission occurring
prior to such amendment or repeal.
6
ARTICLE X
Each person who is or was or had agreed to become a director or officer
of the Corporation, or each person who is or was serving or who had agreed to
serve at the request of the Board of Directors or an officer of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including the heirs, executors,
administrators of estate of such person), shall be indemnified by the
Corporation in accordance with and pursuant to the Bylaws of the Corporation.
The Corporation may provide indemnification to employees and agents of the
Corporation to the extent provided by action of the Board of Directors pursuant
to the Bylaws. Without limiting the generality or the effect of the foregoing,
the Corporation may enter into one or more agreements with any person which
provide for indemnification greater or different than that provided in this
Article X. Any amendment or repeal of this Article X shall not adversely affect
any right or protection existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by law or
in this Certificate of Incorporation, the Board of Directors (and any committee
of the Board of Directors) is expressly authorized, to the extent permitted by
law, to take such action or actions as the Board of Directors or such committee
may determine to be reasonably necessary or desirable to (A) encourage any
individual, limited partnership, general partnership, corporation or other firm
or entity (a "person") to enter into negotiations with the Board of Directors
and management of the Corporation with respect to any transaction which may
result in a change in control of the Corporation which is proposed or initiated
by such person or (B) contest or oppose any such transaction which the Board of
Directors or such committee determines to be unfair, abusive or otherwise
undesirable with respect to the Corporation and its business, assets or
properties or the stockholders of the Corporation, including, without
limitation, the adoption of such plans or the issuance of such rights, options,
capital stock, notes, debentures or other evidences of indebtedness or other
securities of the Corporation, which rights, options, capital stock, notes,
debentures or other evidences of indebtedness and other securities (i) may be
exchangeable for or convertible into cash or other securities on such terms and
conditions as may be determined by the Board of Directors or such committee and
(ii) may provide for the treatment of any holder or class of holders thereof
designated by the Board of Directors or any such committee in respect of the
terms, conditions, provisions and rights of such securities which is different
from, and unequal to, the terms, conditions, provisions and rights applicable to
all other holders thereof.
ARTICLE XII
The Corporation shall have the right at any time and from time to time
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, or any Preferred Stock Designation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed herein or by law;
and all rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article XII; provided, however,
that any amendment or repeal of Article IX or Article X
7
of this Certificate of Incorporation shall not adversely affect any
right or protection existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal; and provided further that no
Preferred Stock Designation shall be amended after the issuance of any shares of
the series of Preferred Stock created thereby, except in accordance with the
terms of such Preferred Stock Designation and the requirements of applicable
law.
8
EXHIBIT C
AMENDED AND RESTATED BYLAWS
OF
PATRON SYSTEMS, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I Stockholders Meetings..................................................................................1
Section 1.1 Annual Meetings.................................................................................1
Section 1.2 Special Meetings................................................................................2
Section 1.3 Notice of Meetings..............................................................................2
Section 1.4 Adjournments....................................................................................2
Section 1.5 Quorum..........................................................................................2
Section 1.6 Conduct; Remote Communication...................................................................3
Section 1.7 Voting..........................................................................................3
Section 1.8 Proxies.........................................................................................4
Section 1.9 Voting Procedures and Inspectors of Elections...................................................5
Section 1.10 Fixing Date of Determination of Stockholders of Record.........................................6
Section 1.11 List of Stockholders Entitled to Vote..........................................................7
ARTICLE II Board of Directors....................................................................................7
Section 2.1 Number..........................................................................................7
Section 2.2 Election; Resignation; Vacancies................................................................7
Section 2.3 Regular Meetings................................................................................9
Section 2.4 Special Meetings................................................................................9
Section 2.5 Organization....................................................................................9
Section 2.6 Quorum; Vote Required for Action................................................................9
Section 2.7 Committees......................................................................................9
Section 2.8 Telephonic Meetings............................................................................10
Section 2.9 Informal Action by Directors...................................................................10
Section 2.10 Committee Rules...............................................................................10
Section 2.11 Reliance upon Records.........................................................................10
Section 2.12 Interested Directors..........................................................................10
Section 2.13 Compensation..................................................................................11
ARTICLE III ....................................................................................................11
Section 3.1 Executive Officers; Election; Qualification; Term of Office....................................11
Section 3.2 Resignation; Removal; Vacancies................................................................11
Section 3.3 Powers and Duties of Executive Officers........................................................11
Section 3.4 Chief Executive Officer........................................................................12
Section 3.5 Secretary......................................................................................12
ARTICLE IV Stock Certificates and Transfers.....................................................................12
Section 4.1 Certificate....................................................................................12
Section 4.2 Lost, Stolen or Destroyed Certificates; Issuance of New Certificates...........................12
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Section 4.3 Transfers of Stock.............................................................................13
Section 4.4 Stockholders of Record.........................................................................13
ARTICLE V Notices...............................................................................................13
Section 5.1 Manner of Notice...............................................................................13
Section 5.2 Dispensation with Notice.......................................................................14
Section 5.3 Waiver of Notice...............................................................................14
ARTICLE VI Indemnification......................................................................................15
Section 6.1 Right to Indemnification.......................................................................15
Section 6.2 Prepayment of Expenses.........................................................................15
Section 6.3 Claims.........................................................................................16
Section 6.4 Non-Exclusivity of Rights......................................................................16
Section 6.5 Other Indemnification..........................................................................16
Section 6.6 Amendment or Repeal............................................................................16
ARTICLE VII General.............................................................................................16
Section 7.1 Fiscal year....................................................................................16
Section 7.2 Seal...........................................................................................16
Section 7.3 Form of Records................................................................................16
Section 7.4 Definitions....................................................................................17
Section 7.5 Amendment of Bylaws............................................................................17
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AMENDED AND RESTATED BYLAWS
OF
PATRON SYSTEMS, INC.
ARTICLE I
Stockholders Meetings
Section 1.1 Annual Meetings.
(a) An annual meeting of stockholders shall be held for the
election of directors and the transaction of such other business as may properly
be brought before the meeting in accordance with these Bylaws at such date, time
and place, if any, as may be fixed by resolution of the Board of Directors of
the Corporation from time to time. The Board of Directors may, in its sole
discretion, determine that the meeting shall not be held at any place, but shall
be held solely by means of remote communication, subject to such guidelines and
procedures as the Board of Directors may adopt, as permitted by applicable law.
Subject to paragraph (b) of this Section 1.1, any other proper business may be
transacted at an annual meeting.
(b) Only such business shall be conducted at an annual meeting
of stockholders as shall have been properly brought before the meeting. For
business to be properly brought before the meeting, it must be: (i) authorized
by the Board of Directors and specified in the notice, or a supplemental notice,
of the meeting, (ii) otherwise brought before the meeting by or at the direction
of the Board of Directors or the chairman of the meeting, or (iii) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given written notice thereof to the Secretary of the Corporation, delivered
or mailed to and received at the principal executive offices of the Corporation
not less than 90 days nor more than 120 days prior to the anniversary date of
the immediately preceding annual meeting; provided, however, that in the event
that no annual meeting was held in the previous year or the annual meeting is
called for a date that is not within 30 days from the anniversary date of the
preceding year's annual meeting date, written notice by a stockholder in order
to be timely must be received not later than the close of business on the tenth
day following the day on which the first public disclosure of the date of the
annual meeting was made. Delivery shall be by hand or by certified or registered
mail, return receipt requested. In no event shall the public disclosure of an
adjournment of an annual meeting commence a new time period for the giving of
stockholder's notice as described above. A stockholder's notice to the Secretary
shall set forth as to each item of business the stockholder proposes to bring
before the meeting: (1) a description of such item and the reasons for
conducting such business at the meeting, (2) the name and address, as they
appear on the Corporation's records, of the stockholder proposing such business,
(3) a representation that the stockholder is a holder of record of shares of
stock of the Corporation entitled to vote with respect to such business and
intends to appear in person or by proxy at the meeting to move the consideration
of such business, (4) the class and number of shares of stock of the Corporation
which are beneficially owned by the stockholder (for purposes of the regulations
under Sections 13 and 14 of the Securities Exchange Act of 1934, as amended),
and (5) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business. No business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the meeting at which any business
is proposed by a stockholder shall, if the facts warrant, determine and declare
to the meeting that such business was not properly brought before the meeting in
accordance with the provisions of this paragraph (b), and, in such event, the
business not properly before the meeting shall not be transacted.
Section 1.2 Special Meetings. Special meetings of stockholders
for any purpose or purposes may be called at any time only by the Chairman of
the Board, if any, or pursuant to a resolution approved by a majority of the
whole Board of Directors or by a committee of the Board of Directors authorized
to call such meetings and by no other person. The Board of Directors may, in its
sole discretion, determine that the special meeting shall not be held at any
place, but shall be held solely by means of remote communication, subject to
such guidelines and procedures as the Board of Directors may adopt, as permitted
by applicable law. The business transacted at a special meeting of stockholders
shall be limited solely to matters relating to the purpose or purposes stated in
the Corporation's notice of meeting.
Section 1.3 Notice of Meetings. A written notice of each
annual or special meeting of stockholders shall be given stating the place, if
any, date and time of the meeting, the means of remote communications, if any,
by which stockholders and proxyholders may be deemed to be present in person and
vote at such meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by law, the
Certificate of Incorporation or these Bylaws, such notice of meeting shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder of record entitled to vote at such meeting, personally, by mail
or, to the extent and in the manner permitted by applicable law, electronically.
If mailed, such notice shall be deemed to be given when deposited in the mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
Section 1.4 Adjournments. Any annual or special meeting of
stockholders may be adjourned from time to time to reconvene at the same or some
other place, if any, and notice need not be given of any such adjourned meeting
if the date, time and place, if any, thereof and the means of remote
communication, if any, by which stockholders and proxyholders may be deemed
present in person and vote at such adjourned meeting are announced at the
meeting at which the adjournment is taken. At the adjourned meeting any business
may be transacted which might have been transacted at the original meeting. If
the adjournment is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned meeting in accordance with Section 1.3.
Section 1.5 Quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, the presence in person or by proxy
of the holders of stock having
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a majority of the votes which could be cast by the holders of all outstanding
stock entitled to vote at the meeting shall constitute a quorum at each meeting
of stockholders. In the absence of a quorum, the stockholders so present may, by
the affirmative vote of the holders of stock having a majority of the votes
which could be cast by all such holders, adjourn the meeting from time to time
in the manner provided in Section 1.4 of these Bylaws until a quorum is present.
If a quorum is present when a meeting is convened, the subsequent withdrawal of
stockholders, even though less than a quorum remains, shall not affect the
ability of the remaining stockholders lawfully to transact business.
Section 1.6 Conduct; Remote Communication. (a) Meetings of
stockholders shall be presided over by the Chairman of the Board, if any, or if
there is none or in his or her absence, by the President, or in his or her
absence, by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting, but in his or her absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.
(a) If authorized by the Board of Directors in accordance with
these Bylaws and applicable law, stockholders and proxyholders not physically
present at a meeting of stockholders may, by means of remote communication, (1)
participate in a meeting of stockholders and (2) be deemed present in person and
vote at a meeting of stockholders, whether such meeting is to be held at a
designated place or solely by means of remote communication, provided that (i)
the Corporation shall implement reasonable measures to verify that each person
deemed present and permitted to vote at the meeting by means of remote
communication is a stockholder or proxyholder, (ii) the Corporation shall
implement reasonable measures to provide such stockholders and proxyholders a
reasonable opportunity to participate in the meeting and to vote on matters
submitted to the stockholders, including an opportunity to read or hear the
proceedings of the meeting substantially concurrently with such proceedings, and
(iii) if any stockholder or proxyholder votes or takes other action at the
meeting by means of remote communication, a record of such vote or other action
shall be maintained by the Corporation.
Section 1.7 Voting.
(a) Except as otherwise provided by the Certificate of
Incorporation, each stockholder entitled to vote at any meeting of stockholders
shall be entitled to one vote for each share of stock held by such stockholder
which has voting power on the matter in question.
(b) Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors of election unless so required by
Section 1.9 of these Bylaws or so determined by the holders of stock having a
majority of the votes which could be cast by the holders of all outstanding
stock entitled to vote which are present in person or by proxy at such meeting.
Unless otherwise provided in the Certificate of Incorporation, directors shall
be elected by a plurality of the votes cast in the election of directors. Each
other question shall, unless otherwise provided by law, the Certificate of
Incorporation or these Bylaws, be decided by the vote of the holders of stock
having a majority of the votes which could be cast by the holders of all stock
entitled to vote on such question which are present in person or by proxy at the
meeting.
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(c) Stock of the Corporation standing in the name of another
corporation and entitled to vote may be voted by such officer, agent or proxy as
the Bylaws or other internal regulations of such other corporation may prescribe
or, in the absence of such provision, as the board of directors or comparable
body of such other corporation may determine.
(d) Stock of the Corporation standing in the name of a
deceased person, a minor, an incompetent or a debtor in a case under Title 11,
United States Code, and entitled to vote may be voted by an administrator,
executor, guardian, conservator, debtor-in-possession or trustee, as the case
may be, either in person or by proxy, without transfer of such shares into the
name of the official or other person so voting.
(e) A stockholder whose voting stock of the Corporation is
pledged shall be entitled to vote such stock unless on the transfer records of
the Corporation the pledgor has expressly empowered the pledgee to vote such
shares, in which case only the pledgee, or such pledgee's proxy, may represent
such shares and vote thereon.
(f) If voting stock is held of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same shares, unless
the Secretary is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect: (i) if only one votes, such act binds all; (ii) if more than
one vote, the act of the majority so voting binds all; and (iii) if more than
one votes, but the vote is evenly split on any particular matter each faction
may vote such stock proportionally, or any person voting the shares, or a
beneficiary, if any, may apply to the Court of Chancery of the State of Delaware
or such other court as may have jurisdiction to appoint an additional person to
act with the persons so voting the stock, which shall then be voted as
determined by a majority of such persons and the person appointed by the Court.
If the instrument so filed shows that any such tenancy is held in unequal
interests, a majority or even split for the purpose of this subsection shall be
a majority or even split in interest.
(g) Stock of the Corporation belonging to the Corporation, or
to another corporation a majority of the shares entitled to vote in the election
of directors of which are held by the Corporation, shall not be voted at any
meeting of stockholders and shall not be counted in the total number of
outstanding shares for the purpose of determining whether a quorum is present.
Nothing in this Section 1.7 shall limit the right of the Corporation to vote
shares of stock of the Corporation held by it in a fiduciary capacity.
Section 1.8 Proxies.
(a) Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for such stockholder
by proxy filed with the Secretary before or at the time of the meeting. No such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy
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which is not irrevocable by attending the meeting and voting in person or by
filing with the Secretary an instrument in writing revoking the proxy or another
duly executed proxy bearing a later date.
(b) A stockholder may authorize another person or persons to
act for such stockholder as proxy (i) by executing a writing authorizing such
person or persons to act as such, which execution may be accomplished by such
stockholder or such stockholder's authorized officer, director, partner,
employee or agent (or, if the stock is held in a trust or estate, by a trustee,
executor or administrator thereof) signing such writing or causing his or her
signature to be affixed to such writing by any reasonable means, including, but
not limited to, facsimile signature, or (ii) by transmitting or authorizing the
transmission of a telegram, cablegram or other means of electronic transmission
(a "Transmission") to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive such
Transmission; provided that any such Transmission must either set forth or be
submitted with information from which it can be determined that such
Transmission was authorized by such stockholder.
(c) Any inspector or inspectors appointed pursuant to Section
1.9 of these Bylaws shall examine Transmissions to determine if they are valid.
If no inspector or inspectors are so appointed, the Secretary or such other
person or persons as shall be appointed from time to time by the Board of
Directors shall examine Transmissions to determine if they are valid. If it is
determined that a Transmission is valid, the person or persons making that
determination shall specify the information upon which such person or persons
relied. Any copy, facsimile telecommunication or other reliable reproduction of
such a writing or Transmission may be substituted or used in lieu of the
original writing or Transmission for any and all purposes for which the original
writing or Transmission could be used; provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or Transmission.
Section 1.9 Voting Procedures and Inspectors of Elections.
(a) If the Corporation has a class of voting stock that is (i)
listed on a national securities exchange, (ii) authorized for quotation on an
interdealer quotation system of a registered national securities association or
(iii) held of record by more than 2,000 stockholders, the Board of Directors
shall, in advance of any meeting of stockholders, appoint one or more inspectors
(individually an "Inspector," and collectively the "Inspectors") to act at such
meeting and make a written report thereof. The Board of Directors may designate
one or more persons as alternate Inspectors to replace any Inspector who shall
fail to act. If no Inspector or alternate is able to act at such meeting, the
chairman of the meeting shall appoint one or more other persons to act as
Inspectors. Each Inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
Inspector with strict impartiality and according to the best of his or her
ability.
(b) The Inspectors shall (i) ascertain the number of shares of
stock of the Corporation outstanding and the voting power of each, (ii)
determine the number of shares of stock of the Corporation present in person or
by proxy at such meeting and the validity of
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proxies and ballots, (iii) count all votes and ballots, (iv) determine and
retain for a reasonable period of time a record of the disposition of any
challenges made to any determination by the Inspectors and (v) certify their
determination of the number of such shares present in person or by proxy at such
meeting and their count of all votes and ballots. The Inspectors may appoint or
retain other persons or entities to assist them in the performance of their
duties.
(c) The date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at a meeting shall
be announced at such meeting. No ballots, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the Inspectors after the
closing of the polls unless the Court of Chancery of the State of Delaware upon
application by any stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the Inspectors shall be limited to an examination of the proxies, any
envelopes submitted with such proxies, any information referred to in paragraphs
(b) and (c) of Section 1.8 of these Bylaws, ballots and the regular books and
records of the Corporation, except that the Inspectors may consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by a
stockholder of record to cast or more votes than such stockholder holds of
record. If the Inspectors consider other reliable information for the limited
purpose permitted herein, the Inspectors, at the time they make their
certification pursuant to paragraph (b) of this Section 1.9, shall specify the
precise information considered by them, including the person or persons from
whom such information was obtained, when and the means by which such information
was obtained and the basis for the Inspectors' belief that such information is
accurate and reliable.
Section 1.10 Fixing Date of Determination of Stockholders of
Record.
(a) In order that the Corporation may determine the
stockholders entitled (i) to notice of or to vote at any meeting of stockholders
or any adjournment thereof, (ii) to receive payment of any dividend or other
distribution or allotment of any rights, (iii) to exercise any rights in respect
of any change, conversion or exchange of stock, or (iv) to take, receive or
participate in any other action, the Board of Directors may fix a record date,
which shall not be earlier than the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which (1) in the case of a
determination of stockholders entitled to notice of or to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law, be
not more than 60 nor less than ten days before the date of such meeting; and (2)
in the case of any other action, shall be not more than 60 days before such
action.
(b) If no record date is fixed, (i) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; and (ii) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
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(c) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting, but the Board of Directors may fix a new record date for the
adjourned meeting.
Section 1.11 List of Stockholders Entitled to Vote. The
Secretary shall prepare, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting for a period of at least
ten days prior to the meeting: (i) on a reasonably accessible electronic
network, provided that the information required to gain access to such list is
provided with the notice of the meeting, or (ii) during ordinary business hours,
at the principal place of business of the Corporation. In the event that the
Corporation determines to make the list available on an electronic network, the
Corporation may take reasonable steps to ensure that such information is
available only to stockholders of the Corporation. If the meeting is to be held
at a place, the list shall also be produced and kept at the time and place of
the meeting during the whole time thereof and may be inspected by any
stockholder who is present. If the meeting is to be held solely by means of
remote communication, the list shall be open to the examination of any
stockholder during the whole time thereof on a reasonably accessible electronic
network, and the information required to access such list shall be provided with
the notice of the meeting. The stock ledger shall be the only evidence as to who
are the stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the Corporation, or to vote in person or by proxy
at any meeting of stockholders.
ARTICLE II
Board of Directors
Section 2.1 Number. The initial Board of Directors shall
consist of three directors. Thereafter, the number of directors may be amended
from time to time by resolution adopted by affirmative vote of a majority of the
whole Board of Directors; provided that no such amendment may shorten the term
of any incumbent director.
Section 2.2 Election; Resignation; Vacancies.
(a) At each annual meeting at which the term of office of a
class of directors expires, the stockholders shall elect directors of such class
each to hold office until the annual meeting at which the terms of office of
such class of directors expire and the election and qualification of his or her
successor, or until his or her earlier death, resignation or removal.
(b) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (b) shall be eligible for election as
directors of the Corporation. Nominations of persons for election to the Board
of Directors may be made at a meeting of stockholders by the Board of Directors
or by any stockholder of the Corporation entitled to vote in the election of
directors at the meeting who complies with the notice procedures set forth in
this paragraph (b). Any nomination by a stockholder must be made by written
notice to the
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Secretary delivered or mailed to and received at the principal executive offices
of the Corporation: (i) with respect to an election to be held at an annual
meeting of stockholders, not less than 90 days nor more than 120 days prior to
the anniversary date of the immediately preceding annual meeting; provided,
however, that in the event that no annual meeting was held in the previous year
or the annual meeting is called for a date that is not within 30 days from the
anniversary date of the preceding year's annual meeting date, written notice by
the stockholder in order to be timely must be so received not later than the
close of business on the tenth day following the day on which public disclosure
of the date of the annual meeting was made, and (ii) with respect to an election
to be held at a special meeting of stockholders called for the purpose of
electing directors, not later than the close of business on the tenth day
following the day on which the first public disclosure of the date of the
special meeting was made. Delivery shall be by hand, or by certified or
registered mail, return receipt requested. In no event shall the public
announcement of an adjournment of any annual or special meeting commence a new
time period for giving of a stockholder notice as described above. A
stockholder's notice to the Secretary shall set forth (x) as to each person whom
the stockholder proposes to nominate for election or re-election as a director:
(1) the name, age, business address and residence address of such person, (2)
the principal occupation or employment of such person, (3) the class and number
of shares of stock of the Corporation which are beneficially owned by such
person (for the purposes of the regulations under Sections 13 and 14 of the
Securities Exchange Act of 1934, as amended), (4) any other information relating
to such person that would be required to be disclosed in solicitations of
proxies for the election of such person as a director of the Corporation
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, had the nominee been nominated by the Board of Directors, and (5) such
person's written consent to being named in any proxy statement as a nominee and
to serving as a director if elected; and (y) as to the stockholder giving
notice: (1) the name and address, as they appear on the Corporation's records,
of such stockholder, (2) the class and number of shares of stock of the
Corporation which are beneficially owned by such stockholder (determined as
provided in clause (x)(3) above), (3) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote on the election of
directors at such meeting and that such stockholder intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice, and (4) a description of all agreements, arrangements or understandings
between the stockholder and each nominee of the stockholder and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder. At the request of the Board of
Directors any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director of the Corporation. The chairman of
the meeting at which a stockholder nomination is presented shall, if the facts
warrant, determine and declare to the meeting that such nomination was not made
in accordance with the procedures prescribed by this paragraph (b), and, in such
event, the defective nomination shall be disregarded.
(c) Any director may resign at any time by giving written
notice to the Chairman of the Board, if any, the President or the Secretary.
Unless otherwise stated in a notice
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of resignation, it shall take effect when received by the officer to whom it is
directed, without any need for its acceptance.
(d) Any newly created directorship or any vacancy occurring in
the Board of Directors for any reason may be filled by a majority of the
remaining directors (excluding any director elected by any class or series of
preferred stock), although less than a quorum, or by a plurality of the votes
cast in the election of directors at a meeting of stockholders. Each director
elected to replace a former director shall hold office until the expiration of
the term of office of the director whom he or she has replaced and the election
and qualification of his or her successor, or until his or her earlier death,
resignation or removal. A director elected to fill a newly created directorship
shall serve until the annual meeting at which the terms of office of the class
of directors to which he or she is assigned expire and the election and
qualification of his or her successor, or until his or her earlier death,
resignation or removal.
Section 2.3 Regular Meetings. Unless otherwise determined by
the Board of Directors, a regular annual meeting of the Board of Directors shall
be held, without call or notice, immediately after and, if the annual meeting of
stockholders is held at a place, at the same place as the annual meeting of
stockholders, for the purpose of organizing the Board of Directors, electing
officers and transacting any other business that may properly come before such
meeting. Additional regular meetings of the Board of Directors may be held
without call or notice at such times as shall be fixed by resolution of the
Board of Directors.
Section 2.4 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, if any, the President, the
Secretary or by any member of the Board of Directors. Notice of a special
meeting of the Board of Directors shall be given by the person or persons
calling the meeting at least twenty-four hours before the special meeting. The
purpose or purposes of a special meeting need not be stated in the call or
notice.
Section 2.5 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or if there is none
or in his or her absence, by the President, or in his or her absence, by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting. A majority of the directors present
at a meeting, whether or not they constitute a quorum, may adjourn such meeting
to any other date, time or place without notice other than announcement at the
meeting.
Section 2.6 Quorum; Vote Required for Action. At all meetings
of the Board of Directors a majority of the whole Board of Directors shall
constitute a quorum for the transaction of business. Unless the Certificate of
Incorporation or these Bylaws otherwise provide, the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.7 Committees. The Board of Directors may designate
one or more committees, each committee to consist of one or more directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence
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or disqualification of a member of the committee, the member or members present
at any meeting and not disqualified from voting, whether or not a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent permitted by law and provided in these Bylaws or in the resolution
of the Board of Directors designating such committee, or an amendment to such
resolution, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it.
Section 2.8 Telephonic Meetings. Directors, or any committee
of directors designated by the Board of Directors, may participate in a meeting
of the Board of Directors or such committee by means of conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 2.8 shall constitute presence in person at such meeting.
Section 2.9 Informal Action by Directors. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or such committee, as the case may be, consent thereto in
writing (which may be in counterparts) or by electronic transmission, and the
written consent or consents or electronic transmission or transmissions are
filed with the minutes of proceedings of the Board of Directors or such
committee. Such filing shall be made in paper form if the minutes of the
Corporation are maintained in paper form and shall be in electronic form if the
minutes are maintained in electronic form.
Section 2.10 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
make, alter and repeal rules for the conduct of its business. In the absence of
such rules each committee shall conduct its business in the same manner as the
Board of Directors conducts its business pursuant to this Article II of these
Bylaws.
Section 2.11 Reliance upon Records. Every director, and every
member of any committee of the Board of Directors, shall, in the performance of
his or her duties, be fully protected in relying in good faith upon the records
of the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors, or by any other person as to matters the director or
member reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation, including, but not limited to, such records, information, opinions,
reports or statements as to the value and amount of the assets, liabilities
and/or net profits of the Corporation, or any other facts pertinent to the
existence and amount of surplus or other funds from which dividends might
properly be declared and paid, or with which the Corporation's capital stock
might properly be purchased or redeemed.
Section 2.12 Interested Directors. A director who is directly
or indirectly a party to a contract or transaction with the Corporation, or is a
director or officer of or has a
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financial interest in any other corporation, partnership, association or other
organization which is a party to a contract or transaction with the Corporation,
may be counted in determining whether a quorum is present at any meeting of the
Board of Directors or a committee thereof at which such contract or transaction
is considered or authorized, and such director may participate in such meeting
and vote on such authorization to the extent permitted by applicable law,
including Section 144 of the General Corporation Law of the State of Delaware.
Section 2.13 Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors. The directors shall be paid their reasonable
expenses, if any, of attendance at each meeting of the Board of Directors or a
committee thereof and may be paid a fixed sum for attendance at each such
meeting and an annual retainer or salary for services as a director or committee
member. No such payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor.
ARTICLE III
Officers
Section 3.1 Executive Officers; Election; Qualification; Term
of Office. The Board of Directors shall elect a President and may, if it so
determines, elect a Chairman of the Board from among its members. The Board of
Directors shall also elect a Secretary and may elect one or more Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers. Any number of offices may be held by the same person. Each
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his or her election,
and until his or her successor is elected and qualified or until his or her
earlier death, resignation or removal.
Section 3.2 Resignation; Removal; Vacancies. Any officer may
resign at any time by giving written notice to the Chairman of the Board, if
any, the President or the Secretary. Unless otherwise stated in a notice of
resignation, it shall take effect when received by the officer to whom it is
directed, without any need for its acceptance. The Board of Directors may remove
any officer with or without cause at any time, but such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation. A vacancy occurring in any office of the Corporation may be filled
for the unexpired portion of the term thereof by the Board of Directors at any
regular or special meeting.
Section 3.3 Powers and Duties of Executive Officers. The
officers of the Corporation shall have such powers and duties in the management
of the Corporation as may be prescribed by the Board of Directors and, to the
extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board of Directors. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
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Section 3.4 Chief Executive Officer. The Chief Executive
Officer of the Corporation shall in general supervise and control all of the
business affairs of the Corporation, subject to the direction of the Board of
Directors. The Chief Executive Officer may execute, in the name and on behalf of
the Corporation, any deeds, mortgages, bonds, contracts or other instruments
which the Board of Directors or a committee thereof has authorized to be
executed, except in cases where the execution shall have been expressly
delegated by the Board of Directors or a committee thereof to some other officer
or agent of the Corporation.
Section 3.5 Secretary. In addition to such other duties, if
any, as may be assigned to the Secretary by the Board of Directors, the Chairman
of the Board, if any, or the President, the Secretary shall (i) keep the minutes
of proceedings of the stockholders, the Board of Directors and any committee of
the Board of Directors in one or more books provided for that purpose; (ii) see
that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (iii) be the custodian of the records and seal of
the Corporation; (iv) affix or cause to be affixed the seal of the Corporation
or a facsimile thereof, and attest the seal by his or her signature, to all
certificates for shares of stock of the Corporation and to all other documents
the execution of which under seal is authorized by the Board of Directors; and
(v) unless such duties have been delegated by the Board of Directors to a
transfer agent of the Corporation, keep or cause to be kept a register of the
name and address of each stockholder, as the same shall be furnished to the
Secretary by such stockholder, and have general charge of the stock transfer
records of the Corporation.
ARTICLE IV
Stock Certificates and Transfers
Section 4.1 Certificate. Every holder of stock shall be
entitled to have a certificate signed by or in the name of the Corporation by
the Chairman of the Board, if any, or the President or a Vice President, and by
the Secretary or an Assistant Secretary, of the Corporation, certifying the
number of shares owned by such stockholder in the Corporation. Any or all of the
signatures on the certificate may be facsimile, stamp or other imprint. In case
any officer, transfer agent, or registrar who has signed or whose facsimile,
stamp or other imprint signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
officer, transfer agent, or registrar continued to be such at the date of issue.
Section 4.2 Lost, Stolen or Destroyed Certificates; Issuance
of New Certificates. The Corporation may issue a new certificate for stock in
the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or such stockholder's legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
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Section 4.3 Transfers of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for stock
of the Corporation duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer or, if the relevant stock
certificate is claimed to have been lost, stolen or destroyed, upon compliance
with the provisions of Section 4.2 of these Bylaws, and upon payment of
applicable taxes with respect to such transfer, and in compliance with any
restrictions on transfer applicable to such stock certificate or the shares
represented thereby of which the Corporation shall have notice and subject to
such rules and regulations as the Board of Directors may from time to time deem
advisable concerning the transfer and registration of stock certificates, the
Corporation shall issue a new certificate or certificates for such stock to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books. Transfers of stock shall be made only on the books of the
Corporation by the registered holder thereof or by such holder's attorney or
successor duly authorized as evidenced by documents filed with the Secretary or
transfer agent of the Corporation. Whenever any transfer of stock shall be made
for collateral security, and not absolutely, it shall be so expressed in the
entry of transfer if, when the certificate or certificates representing such
stock are presented to the Corporation for transfer, both the transferor and
transferee request the Corporation to do so.
Section 4.4 Stockholders of Record. The Corporation shall be
entitled to treat the holder of record of any stock of the Corporation as the
holder thereof and shall not be bound to recognize any equitable or other claim
to or interest in such stock on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise required by the
laws of the State of Delaware.
ARTICLE V
Notices
Section 5.1 Manner of Notice. (a) Except as otherwise provided
by law, the Certificate of Incorporation or these Bylaws, whenever notice is
required to be given to any stockholder, director or member of any committee of
the Board of Directors, such notice may be given by (i) personal delivery, (ii)
depositing it, in a sealed envelope, in the United States mails, first class,
postage prepaid, addressed, (iii) delivering to a company for overnight or
second day mail or delivery, (iv) delivering it to a telegraph company, charges
prepaid, for transmission, or by transmitting it via telecopier, or (v) any
other reliable means permitted by applicable law (including, subject to Section
5.1(b), electronic transmission) to such stockholder, director or member, either
at the address of such stockholder, director or member as it appears on the
records of the Corporation or, in the case of such a director or member, at his
or her business address; and such notice shall be deemed to be given at the time
when it is thus personally delivered, deposited, delivered or transmitted, as
the case may be. Such requirement for notice shall also be deemed satisfied,
except in the case of stockholder meetings, if actual notice is received orally
or by other writing by the person entitled thereto as far in advance of the
event with respect to which notice is being given as the minimum notice period
required by law or these Bylaws.
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(b) Without limiting the foregoing, any notice to stockholders
given by the Corporation pursuant to these Bylaws shall be effective if given by
a form of electronic transmission consented to by the stockholder to whom the
notice is given. Any such consent shall be revocable by the stockholder by
written notice to the Corporation and shall also be deemed revoked if (1) the
Corporation is unable to deliver by electronic transmission two consecutive
notices given by the Corporation in accordance with such consent and (2) such
inability becomes known to the Secretary of the Corporation, the transfer agent
or other person responsible for the giving of notice; provided, however, that
the inadvertent failure to treat such inability as a revocation shall not
invalidate any meeting or other action. Notice given by a form of electronic
transmission in accordance with these Bylaws shall be deemed given: (i) if by
facsimile telecommunication, when directed to a number at which the stockholder
has consented to receive notice; (ii) if by electronic mail, when directed to an
electronic mail address at which the stockholder has consented to receive
notice; (iii) if by a posting on an electronic network, together with separate
notice to the stockholder of such specific posting, upon the later of such
posting and the giving of such separate notice; and (iv) if by another form of
electronic transmission, when directed to the stockholder.
Section 5.2 Dispensation with Notice.
(a) Whenever notice is required to be given by law, the
Certificate of Incorporation or these Bylaws to any stockholder to whom (i)
notice of two consecutive annual meetings of stockholders, or (ii) all, and at
least two, payments (if sent by first class mail) of dividends or interest on
securities of the Corporation during a 12-month period, have been mailed
addressed to such stockholder at the address of such stockholder as shown on the
records of the Corporation and have been returned undeliverable, the giving of
such notice to such stockholder shall not be required. Any action or meeting
which shall be taken or held without notice to such stockholder shall have the
same force and effect as if such notice had been duly given. If any such
stockholder shall deliver to the Corporation a written notice setting forth the
then current address of such stockholder, the requirement that notice be given
to such stockholder shall be reinstated.
(b) Whenever notice is required to be given by law, the
Certificate of Incorporation or these Bylaws to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required, and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given.
Section 5.3 Waiver of Notice. Any written waiver of notice,
signed by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any
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regular or special meeting of the stockholders, directors, or members of a
committee or directors need be specified in any written waiver of notice.
ARTICLE VI
Indemnification
Section 6.1 Right to Indemnification.
(a) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by law as in effect on the date of adoption of these
Bylaws or as it may thereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture or other enterprise, against any and all liability and loss
(including judgments, fines, penalties and amounts paid in settlement) suffered
or incurred and expenses reasonably incurred by such person; provided that any
standard of conduct applicable to whether a director or officer may be
indemnified shall be equally applicable to an employee or agent under this
Article VI. The Corporation shall not be required to indemnify a person in
connection with a proceeding initiated by such person, including a counterclaim
or crossclaim, unless the proceeding was authorized by the Board of Directors.
(b) For purposes of this Article VI: (i) any reference to
"other enterprise" shall include all plans, programs, policies, agreements,
contracts and payroll practices and related trusts for the benefit of or
relating to employees of the Corporation and its related entities ("employee
benefit plans"); (ii) any reference to "fines", "penalties", "liability" and
"expenses" shall include any excise taxes, penalties, claims, liabilities and
reasonable expenses (including reasonable legal fees and related expenses)
assessed against or incurred by a person with respect to any employee benefit
plan; (iii) any reference to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the Corporation
or trustee or administrator of any employee benefit plan which imposes duties
on, or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants, beneficiaries,
fiduciaries, administrators and service providers; (iv) any reference to serving
at the request of the Corporation as a director, officer, employee or agent of a
partnership or trust shall include service as a partner or trustee; and (v) a
person who acted in good faith and in a manner he or she reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" for purposes of this Article VI.
Section 6.2 Prepayment of Expenses. The Corporation shall pay
or reimburse the reasonable expenses incurred in defending any proceeding in
advance of its final disposition if the Corporation has received an undertaking
by the person receiving such payment or
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reimbursement to repay all amounts advanced if it should be ultimately
determined that he or she is not entitled to be indemnified under this Article
VI or otherwise.
Section 6.3 Claims. If a claim for indemnification or payment
of expenses under this Article VI is not paid in full within 60 days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 6.4 Non-Exclusivity of Rights. The rights conferred on
any person by this Article VI shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 6.5 Other Indemnification. The Corporation's
obligation, if any, to indemnify any person who was or is serving at its request
as a director, officer, employee, partner or agent of another corporation,
partnership, joint venture or other enterprise shall be reduced by any amount
such person may collect as indemnification from such other corporation,
partnership, joint venture or other enterprise.
Section 6.6 Amendment or Repeal. Any repeal or modification of
the foregoing provisions of this Article VI shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VII
General
Section 7.1 Fiscal year. The fiscal year of the Corporation
shall be determined by resolution of the Board of Directors.
Section 7.2 Seal. The corporate seal, if any, shall have the
name of the Corporation inscribed thereon and shall be in such form as may be
approved from time to time by the Board of Directors.
Section 7.3 Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, electronic format or any
other information storage device, provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
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Section 7.4 Definitions. (a) For purposes of these Bylaws,
"electronic transmission" means any form of communication, not directly
involving the physical transmission of paper, that creates a record that may be
retained, retrieved and reviewed by a recipient thereof, and that may be
directly reproduced in paper form by such a recipient through an automated
process.
(b) For purposes of these Bylaws, "public disclosure" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service, or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended.
Section 7.5 Amendment of Bylaws. These Bylaws may be altered
or repealed, and new Bylaws made, by the majority vote of the whole Board of
Directors, but the stockholders may make additional Bylaws and may alter and
repeal any Bylaws whether adopted by them or otherwise by the affirmative vote
of the holders of at least sixty six and two-thirds percent (66 2/3%) of the
outstanding voting power of the Corporation's capital stock entitled to vote
thereon, voting together as a single class.
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EXHIBIT D
CHAPTER 92A
MERGERS AND EXCHANGES OF INTEREST
RIGHTS OF DISSENTING OWNERS
NRS 92A.300 Definitions. As used in NRS 92A.300 to
92A.500, inclusive, unless the context otherwise
requires, the words and terms defined in NRS 92A.305
to 92A.335, inclusive, have the meanings ascribed to
them in those sections.
NRS 92A.305 "Beneficial stockholder" defined.
"Beneficial stockholder" means a person who is a
beneficial owner of shares held in a voting trust or
by a nominee as the stockholder of record.
NRS 92A.310 "Corporate action" defined. "Corporate action"
means the action of a domestic corporation.
NRS 92A.315 "Dissenter" defined. "Dissenter" means a
stockholder who is entitled to dissent from a
domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner
required by NRS 92A.410 to 92A.480, inclusive.
NRS 92A.320 "Fair value" defined. "Fair value," with
respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of
the corporate action to which he objects, excluding
any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be
inequitable.
NRS 92A.325 "Stockholder" defined. "Stockholder" means a
stockholder of record or a beneficial stockholder of
a domestic corporation.
NRS 92A.330 "Stockholder of record" defined.
"Stockholder of record" means the person in whose
name shares are registered in the records of a
domestic corporation or the beneficial owner of
shares to the extent of the rights granted by a
nominee's certificate on file with the domestic
corporation.
NRS 92A.335 "Subject corporation" defined. "Subject
corporation" means the domestic corporation which is
the issuer of the shares held by a dissenter before
the corporate action creating the dissenter's rights
becomes effective or the surviving or acquiring
entity of that issuer after the corporate action
becomes effective.
NRS 92A.340 Computation of interest. Interest payable pursuant
to NRS 92A.300 to 92A.500, inclusive, must be
computed from the effective date of the action until
the date of payment, at the average rate currently
paid by the entity on its principal bank loans or,
if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
NRS 92A.350 Rights of dissenting partner of domestic limited
partnership . A partnership agreement of a domestic
limited partnership or, unless otherwise provided in
the partnership agreement, an agreement of merger or
exchange, may provide that contractual rights with
respect to the partnership interest of a dissenting
general or limited partner of a domestic limited
partnership are available for any class or group of
partnership interests in connection with any merger
or exchange in which the domestic limited
partnership is a constituent entity.
NRS 92A.360 Rights of dissenting member of domestic
limited-liability company. The articles of
organization or operating agreement of a domestic
limited-liability company or, unless otherwise
provided in the articles of organization or
operating agreement, an agreement of merger or
exchange, may provide that contractual rights with
respect to the interest of a dissenting member are
available in connection with any merger or exchange
in which the domestic limited-liability company is a
constituent entity.
NRS 92A.370 Rights of dissenting member of domestic nonprofit
corporation.
1. Except as otherwise provided in
subsection 2 and unless otherwise provided in the
articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the
merger may, without prior notice, but within 30 days
after the effective date of the merger, resign from
membership and is thereby excused from all
contractual obligations to the constituent or
surviving corporations which did not occur before
his resignation and is thereby entitled to those
rights, if any, which would have existed if there
had been no merger and the membership had been
terminated or the member had been expelled.
2. Unless otherwise provided in
its articles of incorporation or bylaws, no member
of a domestic nonprofit corporation, including, but
not limited to, a cooperative corporation, which
supplies services described in chapter 704 of NRS to
its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or
by reason of the ownership of an interest in real
property, may resign and dissent pursuant to
subsection 1.
NRS 92A.380 Right of stockholder to dissent from certain
corporate actions and to obtain payment for shares.
1. Except as otherwise provided in NRS
92A.370 to 92A.390, a stockholder is entitled to
dissent from, and obtain payment of the fair value
of his shares in the event of any of the following
corporate actions:
(a) Consummation of a plan of
merger to which the domestic corporation is
a party:
(1) If approval by the
stockholders is required for the
merger by NRS 92A.120 to 92A.160,
inclusive, or the articles of
incorporation and he is entitled to
vote on the merger; or
(2) If the domestic
corporation is a subsidiary and is
merged with its parent under NRS
92A.180.
(b) Consummation of a plan of
exchange to which the domestic corporation
is a party as the corporation whose subject
owner's interests will be acquired, if he
is entitled to vote on the plan.
(c) Any corporate action taken
pursuant to a vote of the stockholders to
the event that the articles of
incorporation, bylaws or a resolution of
the board of directors provides that voting
or nonvoting stockholders are entitled to
dissent and obtain payment for their
shares.
2. A stockholder who is entitled to
dissent and obtain payment under NRS 92A.300 to
92A.500, inclusive, may not challenge the corporate
action creating his entitlement unless the action is
unlawful or fraudulent with respect to him or the
domestic corporation.
NRS 92A.390 Limitations on right of dissent: Stockholders of
certain classes or series; action of stockholders
not required for plan of merger.
1. There is no right of dissent with
respect to a plan of merger or exchange in favor of
stockholders of any class or series which, at the
record date fixed to determine the stockholders
entitled to receive notice of and to vote at the
meeting at which the plan of merger or exchange is
to be acted on, were either listed on a national
securities exchange, included in the national market
system by the National Association of Securities
Dealers, Inc., or held by at least 2,000
stockholders of record, unless:
(a) The articles of incorporation
of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or
series are required under the plan of
merger or exchange to accept for the shares
anything except:
(1) Cash, owner's interests
and cash in lieu of fractional owner's
interests of:
(I) The surviving or
acquiring entity; or
(II) Any other entity
which, at the effective date of
the plan of merger or exchange,
were either listed on a national
securities exchange, included in
the national market system by the
National Association of Securities
Dealers, Inc., or held of record
by at least 2,000 holders of
owner's interests of record; or
(2) A combination of cash
and owner's interests of the kind
described in sub-subparagraphs (I) and
(II) of subparagraph (1) of paragraph
(b).
2. There is no right of dissent for
any holders of stock of the surviving domestic
corporation if the plan of merger does not require
action of the stockholders of the surviving domestic
corporation under NRS 92A.130.
NRS 92A.400 Limitations on right of dissent: Assertion
as to portions only to shares registered to
stockholder; assertion by beneficial stockholder.
1. stockholder of record may assert
dissenter's rights as to fewer than all of the
shares registered in his name only if he dissents
with respect to all shares beneficially owned by any
one person and notifies the subject corporation in
writing of the name and address of each person on
whose behalf he asserts dissenter's rights. The
rights of a partial dissenter under this subsection
are determined as if the shares as to which he
dissents and his other shares were registered in the
names of different stockholders.
2. A beneficial stockholder may assert
dissenter's rights as to shares held on his behalf
only if:
(a) He submits to the subject
corporation the written consent of the
stockholder of record to the dissent not
later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to
all shares of which he is the beneficial
stockholder or over which he has power to
direct the vote.
NRS 92A.410 Notification of stockholders regarding right of
dissent.
1. If a proposed corporate action
creating dissenters' rights is submitted to a vote
at a stockholders' meeting, the notice of the
meeting must state that stockholders are or may be
entitled to assert dissenters' rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by
a copy of those sections.
2. If the corporate action creating
dissenters' rights is taken by written consent of
the stockholders or without a vote of the
stockholders, the domestic corporation shall notify
in writing all stockholders entitled to assert
dissenters' rights that the action was taken and
send them the dissenter's notice described in NRS
92A.430.
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action
creating dissenters' rights is submitted to a vote
at a stockholders' meeting, a stockholder who wishes
to assert dissenter's rights:
(a) Must deliver to the subject
corporation, before the vote is taken,
written notice of his intent to demand
payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in
favor of the proposed action.
2. A stockholder who does not satisfy
the requirements of subsection 1 and NRS 92A.400 is
not entitled to payment for his shares under this
chapter.
NRS 92A.430 Dissenter's notice: Delivery to stockholders
entitled to assert rights; contents.
1. If a proposed corporate action
creating dissenters' rights is authorized at a
stockholders' meeting, the subject corporation shall
deliver a written dissenter's notice to all
stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent
no later than 10 days after the effectuation of the
corporate action, and must:
(a) State where the demand for
payment must be sent and where and when
certificates, if any, for shares must be
deposited;
(b) Inform the holders of shares
not represented by certificates to what
extent the transfer of the shares will be
restricted after the demand for payment is
received;
(c) Supply a form for demanding
payment that includes the date of the first
announcement to the news media or to the
stockholders of the terms of the proposed
action and requires that the person
asserting dissenter's rights certify
whether or not he acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the
subject corporation must receive the demand
for payment, which may not be less than 30
nor more than 60 days after the date the
notice is delivered; and
(e) Be accompanied by a copy of
NRS 92A.300 to 92A.500, inclusive.
NRS 92A.440 Demand for payment and deposit of certificates;
retention of rights of stockholder.
1. A stockholder to whom a dissenter's
notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired
beneficial ownership of the shares before
the date required to be set forth in the
dissenter's notice for this certification;
and
(c) Deposit his certificates, if
any, in accordance with the terms of the
notice.
2. The stockholder who demands payment
and deposits his certificates, if any, before the
proposed corporate action is taken retains all other
rights of a stockholder until those rights are
canceled or modified by the taking of the proposed
corporate action.
3. The stockholder who does not demand
payment or deposit his certificates where required,
each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares
under this chapter.
NRS 92A.450 Uncertificated shares: Authority to restrict
transfer after demand for payment; retention of
rights of stockholder.
1. The subject corporation may
restrict the transfer of shares not represented by a
certificate from the date the demand for their
payment is received.
2. The person for whom dissenter's
rights are asserted as to shares not represented by
a certificate retains all other rights of a
stockholder until those rights are canceled or
modified by the taking of the proposed corporate
action.
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS
92A.470, within 30 days after receipt of a demand
for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount
the subject corporation estimates to be the fair
value of his shares, plus accrued interest. The
obligation of the subject corporation under this
subsection may be enforced by the district court:
(a) Of the county where the
corporation's registered office is located;
or
(b) At the election of any
dissenter residing or having its registered
office in this state, of the county where
the dissenter resides or has its registered
office. The court shall dispose of the
complaint promptly.
2. The payment must be
accompanied by:
(a) The subject corporation's
balance sheet as of the end of a fiscal
year ending not more than 16 months before
the date of payment, a statement of income
for that year, a statement of changes in
the stockholders' equity for that year and
the latest available interim financial
statements, if any;
(b) A statement of the subject
corporation's estimate of the fair value of
the shares;
(c) An explanation of how the
interest was calculated;
(d) A statement of the
dissenter's rights to demand payment under
NRS 92A.480; and
(e) A copy of NRS 92A.300 to
92A.500, inclusive.
NRS 92A.470 Payment for shares: Shares acquired on or after
date of dissenter's notice.
1. A subject corporation may elect to
withhold payment from a dissenter unless he was the
beneficial owner of the shares before the date set
forth in the dissenter's notice as the date of the
first announcement to the news media or to the
stockholders of the terms of the proposed action.
2. To the extent the subject
corporation elects to withhold payment, after taking
the proposed action, it shall estimate the fair
value of the shares, plus accrued interest, and
shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his
demand. The subject corporation shall send with its
offer a statement of its estimate of the fair value
of the shares, an explanation of how the interest
was calculated, and a statement of the dissenters'
right to demand payment pursuant to NRS 92A.480.
NRS 92A.480 Dissenter's estimate of fair value: Notification of
subject corporation; demand for payment of estimate.
1. A dissenter may notify the subject
corporation in writing of his own estimate of the
fair value of his shares and the amount of interest
due, and demand payment of his estimate, less any
payment pursuant to NRS 92A.460, or reject the offer
pursuant to NRS 92A.470 and demand payment of the
fair value of his shares and interest due, if he
believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less
than the fair value of his shares or that the
interest due is incorrectly calculated.
2. A dissenter waives his right to
demand payment pursuant to this section unless he
notifies the subject corporation of his demand in
writing within 30 days after the subject corporation
made or offered payment for his shares.
NRS 92A.490 Legal proceeding to determine fair value: Duties
of subject corporation; powers of court; rights of
dissenter.
1. If a demand for payment remains
unsettled, the subject corporation shall commence a
proceeding within 60 days after receiving the demand
and petition the court to determine the fair value
of the shares and accrued interest. If the subject
corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
2. A subject corporation shall
commence the proceeding in the district court of the
county where its registered office is located. If
the subject corporation is a foreign entity without
a resident agent in the state, it shall commence the
proceeding in the county where the registered office
of the domestic corporation merged with or whose
shares were acquired by the foreign entity was
located.
3. The subject corporation shall make
all dissenters, whether or not residents of Nevada,
whose demands remain unsettled, parties to the
proceeding as in an action against their shares. All
parties must be served with a copy of the petition.
Nonresidents may be served by registered or
certified mail or by publication as provided by law.
4. The jurisdiction of the court in
which the proceeding is commenced under subsection 2
is plenary and exclusive. The court may appoint one
or more persons as appraisers to receive evidence
and recommend a decision on the question of fair
value. The appraisers have the powers described in
the order appointing them, or any amendment thereto.
The dissenters are entitled to the same discovery
rights as parties in other civil proceedings.
5. Each dissenter who is made a party
to the proceeding is entitled to a judgment:
(a) For the amount, if any, by
which the court finds the fair value of his
shares, plus interest, exceeds the amount
paid by the subject corporation; or
(b) For the fair value, plus
accrued interest, of his after-acquired
shares for which the subject corporation
elected to withhold payment pursuant to NRS
92A.470.
NRS 92A.500 Legal proceeding to determine fair value: Assessment
of costs and fees.
1. The court in a proceeding to
determine fair value shall determine all of the
costs of the proceeding, including the reasonable
compensation and expenses of any appraisers
appointed by the court. The court shall assess the
costs against the subject corporation, except that
the court may assess costs against all or some of
the dissenters, in amounts the court finds
equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment.
2. The court may also assess the fees
and expenses of the counsel and experts for the
respective parties, in amounts the court finds
equitable:
(a) Against the subject
corporation and in favor of all dissenters
if the court finds the subject corporation
did not substantially comply with the
requirements of NRS 92A.300 to 92A.500,
inclusive; or
(b) Against either the subject
corporation or a dissenter in favor of any
other party, if the court finds that the
party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the
rights provided by NRS 92A.300 to 92A.500,
inclusive.
3. If the court finds that the
services of counsel for any dissenter were of
substantial benefit to other dissenters similarly
situated, and that the fees for those services
should not be assessed against the subject
corporation, the court may award to those counsel
reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant
to NRS 92A.460, the court may assess the costs
against the subject corporation, except that the
court may assess costs against all or some of the
dissenters who are parties to the proceeding, in
amounts the court finds equitable, to the extent the
court finds that such parties did not act in good
faith in instituting the proceeding.
5. This section does not preclude any
party in a proceeding commenced pursuant to NRS
92A.460 or 92A.490 from applying the provisions of
N.R.C.P. 68 or NRS 17.115.
EXHIBIT E
DISSENTER'S DEMAND FOR PAYMENT
TO: Patron Holdings, Inc.
311 Belle Foret Drive, Suite 150
Lake Bluff, Illinois 60044
Attn: Corporate Secretary
THE UNDERSIGNED, being the beneficial owner of _____ shares of
common stock of Patron Holdings, Inc. ("PAHG"), hereby dissents to the merger of
PAHG into its Delaware subsidiary Patron Systems, Inc. and hereby exercises
dissenter's rights pursuant to Section 92A.300 to 92A.500 of the Nevada General
Corporation Law. Demand is hereby made for fair market value of the shares
described above. Enclosed herewith is Stock Certificate No. ____ representing
beneficial ownership of _________ shares of common stock of PAHG, to be
deposited with PAHG pursuant to the requirements of Nevada law.
The undersigned hereby certifies that he or she acquired
beneficial ownership of these shares before October 23, 2002.
Dated:
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Print Name:
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