SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made this 21st day of May 2001, by
and between Royal Financial Corporation, a Nevada corporation ("RFC"), and
Patriot Manufacturing Corporation, a California corporation ("PMC").
WHEREAS, RFC desires to acquire all of the issued and outstanding
shares of common stock of PMC in exchange for an aggregate of 40,000,000
shares of the common stock of RFC (the "Common Stock") (the "Exchange Offer");
and
WHEREAS, The shareholders of all the issued and outstanding shares of
the common stock of PMC and wish to exchange such shares for the Common Stock
of RFC; and
WHEREAS, PMC desires to assist RFC in a business combination which
will result in the shareholders of PMC owning no less than eighty four percent
(84.00 %) of the then issued and outstanding shares of RFC's Common Stock, and
RFC holding 100% of the issued and outstanding shares of PMC's common stock;
and
WHEREAS, the voluntary share exchange contemplated hereby will result
in the PMC shareholders tendering all of the outstanding common stock of PMC
to RFC in exchange solely for the Common Stock and no other consideration,
which the parties hereto intend to treat as a reorganization under Internal
Revenue Code Section 368(a)(1)(B).
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 ISSUANCE OF SHARES. Subject to all of the terms and conditions of
this Agreement, RFC agrees to offer 800,000 shares of Common Stock for each
share of PMC common stock issued and outstanding, or a total of 40,000,000
shares of RFC Common Stock. The Common Stock will be issued directly to the
shareholders of PMC. The shareholders of PMC shall confirm acceptance of the
exchange Offer by executing the Letter of Acceptance as attached hereto as
Exhibit C.
1.2 EXEMPTION FROM REGISTRATION. The parties hereto intend that the
Common Stock to be issued by RFC to PMC shareholders shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Sections 4(2) and 4(6) of the Act and the rules and
regulations promulgated thereunder.
1.3 INVESTMENT INTENT. Prior to the consummation of the Exchange Offer,
all shareholders shall execute a Letter of Acceptance or such other documents
containing, among other things, representations and warranties relating to
investment intent and investor status, restrictions on transferability and
restrictive legends such that the counsel for both RFC and PMC shall be
satisfied that the offer and sale of RFC shares as contemplated by this
Agreement shall be exempt from the registration requirements of the Act and
any applicable state blue sky laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PMC
Except as disclosed in Schedule 1 which is attached hereto and incorporated
herein by reference, PMC hereby represents and warrants to RFC that:
2.1 ORGANIZATION. PMC is a corporation duly organized, validly existing,
and in good standing under the laws of California, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing
in each of the jurisdictions where its business requires qualification.
2.2 CAPITAL. The authorized capital stock of PMC consists of 10,000,000
shares of common stock, no par value, of which 50 shares are currently issued
and outstanding. All of the issued and outstanding shares of common stock of
PMC are duly authorized, validly issued, fully paid, and nonassessable. There
are no outstanding subscriptions, options, rights, warrants, debentures,
instruments, convertible securities, or other agreements or commitments
obligating PMC to issue or to transfer from treasury any additional shares of
its capital stock of any class.
2.3 SUBSIDIARIES. PMC does not have any subsidiaries or own any interest
in any other enterprise (whether or not such enterprise is a corporation).
2.4 DIRECTORS AND OFFICERS. Schedule 2 contains the names and titles of
all directors and officers of PMC as of the date of this Agreement.
2.5 FINANCIAL STATEMENTS. PMC has delivered to RFC audited balance sheets
and statements of operations for the period ended September 30, 2000 (the
"Financial Statements"). In addition, PMC will deliver to RFC by May 18, 2001,
un-audited Financial Statements for the period ended March 31, 2001 that have
been reviewed by the independent auditors. The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial Statements
accurately set out and describe the financial condition of PMC as of September
30, 2000. PMC's unaudited financial statements will be able to be audited in
accordance with Regulation S-B adopted under the Act.
2.6 ABSENCE OF CHANGES. Since September 30, 2000, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of PMC's knowledge, PMC has conducted its
business only in the ordinary course and has not experienced or suffered any
material adverse change in the condition (financial or otherwise), results of
operations, properties, business or prospects of PMC or waived or surrendered
any claim or right of material value.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither PMC nor any of its
properties or assets are subject to any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not reflected in the financial statements presented
to RFC or have otherwise been disclosed in Schedule 2.
2.8 TAX RETURNS. Within the times and in the manner prescribed by law,
PMC has filed all federal, state and local tax returns required by law, or has
timely filed extensions which have not yet expired, and has paid all taxes,
assessments and penalties due and payable.
2.9 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, RFC and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of PMC. PMC shall make available to RFC
and/or its attorneys all books and records of PMC.
2.10 TRADE NAMES AND RIGHTS. PMC does not use any trademark, service xxxx,
or own any trademarks, trademark registrations or applications, trade names,
service marks, copyrights, copyright registrations or applications.
2.11 COMPLIANCE WITH LAWS. To the best of PMC's knowledge, PMC has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business.
2.12 LITIGATION. PMC is not a party to any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation
pending or, to the best knowledge of PMC, threatened against or affecting PMC
or its business, assets or financial condition. PMC is not in default with
respect to any order, writ, injunction or decree of any federal, state, local
or foreign court, department, agency or instrumentality applicable to it.
2.13 AUTHORITY. PMC has full corporate power and authority to enter into
this Agreement. The board of directors of PMC has taken all action required
to authorize the execution and delivery of this Agreement by or on behalf of
PMC and the performance of the obligations of PMC under this Agreement. No
other corporate proceedings on the part of PMC are necessary to authorize the
execution and delivery of this Agreement by PMC in the performance of its
obligations under this Agreement. This Agreement is and will be, when
executed and delivered by PMC a valid and binding agreement of PMC,
enforceable against PMC in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights
generally.
2.14 ABILITY TO CARRY OUT OBLIGATIONS. Neither the execution and delivery
of this Agreement, the performance by PMC of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will: (a) materially violate any provision of PMC's articles of
incorporation or bylaws; (b) with or without the giving of notice or the
passage of time, or both, violate, or be in conflict with, or constitute a
material default under, or cause or permit the termination or the acceleration
of the maturity of, any debt, contract, agreement or obligation of PMC, or
require the payment of any prepayment or other penalties; (c) require notice
to, or the consent of, any party to any agreement or commitment, lease or
license, to which PMC is bound; (d) result in the creation or imposition of
any security interest, lien, or other encumbrance upon any material property
or assets of PMC; or (e) violate any material statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority to
which PMC is bound or subject.
2.15 FULL DISCLOSURE. None of the representations and warranties made by
PMC herein, or in any schedule, exhibit or certificate furnished or to be
furnished in connection with this Agreement by PMC, or on its behalf, contains
or will contain any untrue statement of material fact or omits or will omit
any material fact required to make any representation or warranty not
misleading.
2.16 ASSETS. PMC has good and marketable title to all of its tangible
properties and such tangible properties are not subject to any material liens
or encumbrances.
2.17 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto on Schedule 1 is a
list of all agreements, contracts, indebtedness, liabilities and other
obligations to which PMC is a party or by which it is bound that are material
to the conduct and operations of its business and properties, which provide
for payments to or by PMC in excess of $5,000; or which involve transactions
or proposed transactions between PMC and its officers, directors, affiliates
or any affiliate thereof ("Material Obligations"). Copies of such agreements
and contracts and documentation evidencing such liabilities and other
obligations have been made available for inspection by RFC and its counsel.
All of such agreements and contracts, if any, are valid, binding and in full
force and effect in all material respects, assuming due execution by the other
parties to such agreements and contracts.
2.18 CONSENTS AND APPROVALS. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by PMC in connection with: (a)
the execution and delivery by PMC of this Agreement; (b) the performance by
PMC of its obligations under this Agreement; or (c) the consummation by PMC of
the transactions contemplated under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF RFC
Except as disclosed in Schedule 3 which is attached hereto and incorporated
herein by reference, RFC represents and warrants to PMC that:
3.1 ORGANIZATION. RFC is a corporation duly organized, valid existing,
and in good standing under the laws of Nevada, has all necessary corporate
powers to own properties and to carry on business, and it is not now
conducting any business, except to the extent to which the effecting of the
transaction contemplated by this Agreement constitutes doing business.
3.2 CAPITALIZATION. The authorized capital stock of RFC consists of
50,000,000 shares of $0.001 par value Common Stock of which 7,474,382 shares
of Common Stock are currently issued and outstanding. All of the issued and
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable. There are stock option grants totaling 1,330,000
shares at prices ranging from $0.20 to $4.25 which are set forth in Schedule 2
attached hereto. There are no other outstanding subscriptions, warrants,
convertible securities, or other agreements or commitments obligating RFC to
issue or to transfer from treasury any additional shares of its capital stock
of any class.
3.3 SUBSIDIARIES. RFC has subsidiaries as disclosed in the current Form
10-K for year end August 31, 2000 and the most recent 10Q for the period ended
February 28, 2001. RFC has two wholly owned subsidiaries know as Royal
Mortgage Corporation and Xxxxxx Xxxxx of Sugarmill, Inc.
3.4 DIRECTORS AND OFFICERS. Schedule 3 contains the name and titles of
all directors and officers of RFC as of the date of this Agreement.
3.5 FINANCIAL STATEMENTS. RFC has delivered to PMC its 10K-SB August 31,
2000 and 10Q-SB for the period ended February 28, 2001(the "Financial
Statements"). The Financial Statements are complete and correct in all
material respects and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated. The Financial Statements accurately set out and describe the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein.
3.6 ABSENCE OF CHANGES. Since August 31, 2000, and as reported in RFC's
quarterly reports as filed on Form 10Q-SB for February 28, 2001, except for
direct expenses incurred by RFC in connection with this Agreement and the
transactions contemplated hereby, and except for changes in the ordinary
course of business which have not in the aggregate been materially adverse, to
the best of RFC's knowledge, RFC has not experienced or suffered any material
adverse change in its condition (financial or otherwise), results of
operations, properties, business or prospects or waived or surrendered any
claim or right of material value.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except for direct expenses
incurred by RFC in connection with this Agreement and the transactions
contemplated hereby, neither RFC nor any of its properties or assets are
subject to any liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise and whether due or to become due, that are
not reflected in the financial statements presented to PMC.
3.8 TAX RETURNS. Within the times and in the manner prescribed by law,
RFC has filed all federal, state and local tax returns required by law or has
timely filed extensions and has paid all taxes, assessments and penalties due
and payable.
3.9 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, PMC shall have
the opportunity to meet with RFC's accountants and attorneys to discuss the
financial condition of RFC. RFC shall make available to PMC all books and
records of RFC.
3.10 TRADE NAMES AND RIGHTS. RFC does not use any trademark, service xxxx,
trade name, or copyright in its business, or own any trademarks, trademark
registrations or applications, trade names, service marks, copyrights,
copyright registrations or applications.
3.11 COMPLIANCE WITH LAWS. To the best of RFC's knowledge, RFC has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting its
properties or the operation of its business or with which it is otherwise
required to comply.
3.12 LITIGATION. RFC is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of RFC, threatened against or affecting RFC
or its business, assets, or financial condition. RFC is not in default with
respect to any order, writ, injunction, or decree of any federal, state,
local, or foreign court, department agency, or instrumentality. RFC is not
engaged in any legal action to recover moneys due to it.
3.13 BULLETIN BOARD LISTING. RFC's Common Stock is currently listed for
trading on the OTC Bulletin Board under the symbol ROYF, and RFC is not aware
of steps being taken by the NASD to cause the Common Stock to be delisted.
3.14 NO PENDING INVESTIGATION. RFC is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding RFC or any
officers or directors of RFC.
3.15 AUTHORITY. RFC has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The Board of Directors of RFC has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of RFC,
the performance of the obligations of RFC under this Agreement and the
consummation by RFC of the transactions contemplated under this Agreement.
Other than a special shareholders meeting as might be required, no other
corporate proceedings on the part of RFC are necessary to authorize the
execution and delivery of this Agreement by RFC and the performance of its
obligations under this Agreement. This Agreement is and will be, when executed
and delivered by RFC, a valid and binding agreement of RFC, enforceable
against RFC in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors rights generally.
3.16 ABILITY TO CARRY OUT OBLIGATIONS. Neither the execution and delivery
of this Agreement, the performance by RFC of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will: (a) violate any provision of RFC's articles of incorporation
or bylaws; (b) with or without the giving of notice or the passage of time,
or both, violate, or be in conflict with, or constitute a default under, or
cause or permit the termination or the acceleration of the maturity of, any
debt, contract, agreement or obligation of RFC, or require the payment of any
prepayment or other penalties; (c) require notice to, or the consent of, any
party to any agreement or commitment, lease or license, to which RFC is bound;
(d) result in the creation or imposition of any security interest, lien or
other encumbrance upon any property or assets of RFC; or (e) to best of RFC's
knowledge violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority to which RFC is
bound or subject.
3.17 VALIDITY OF RFC SHARES. The shares of RFC Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
3.18 FULL DISCLOSURE. None of the representations and warranties made by
RFC herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by RFC, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
3.19 ASSETS. RFC has good and marketable title to all of its tangible
properties and such tangible properties are not subject to any liens or
encumbrances.
3.20 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto on Schedule 3 is a
list of all agreements, contracts, indebtedness, liabilities and other
obligations to which RFC is a party or by which it is bound that are material
to the conduct and operations of its business and properties, which provide
for payments to or by RFC in excess of $5,000; or which involve transactions
or proposed transactions between RFC and its officers, directors, affiliates
or any affiliate thereof. Copies of such agreements and contracts and
documentation evidencing such liabilities and other obligations have been made
available for inspection by PMC and its counsel. All of such agreements and
contracts are valid, binding and in full force and effect in all material
respects, assuming due execution by the other parties to such agreements and
contracts.
3.21 CONSENTS AND APPROVALS. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by RFC in connection with: (a)
the execution and delivery by RFC of its obligations under this Agreement; (b)
the performance by RFC of its obligations under this Agreement; or (c) the
consummation by RFC of the transactions contemplated by this Agreement.
3.22 Real Property. RFC does not own, use or claim any interest in any
real property, including without limitation any license, leasehold or any
similar interest in real property.
3.23 Prior to closing. RFC shall have current assets which includes notes
due from PMC to RFC in an amount of $1,000,000 and a note of $500,000 from
TEPI, LLC a Nevada LLC secured by real property.
3.24 RFC shares outstanding. Prior to the issuance of the 40,000,000 RFC
shares in exchange for the 50 shares of PMC, RFC shall have no more than
7,490,000 shares issued and outstanding and options issued to purchase no more
than 1,330,000 shares of common stock as set forth on Schedule 2.
ARTICLE 4
COVENANTS
4.1 INVESTIGATIVE RIGHTS. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
4.2 CONDUCT OF BUSINESS. Prior to the Closing, RFC and PMC shall each
conduct its business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party,
except in the regular course of business or as contemplated in previously
disclosed contractual obligations. Neither RFC nor PMC shall amend its
Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock
or other securities, incur additional or newly-funded liabilities, acquire
fixed assets, change employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other
than in the regular course of business except as otherwise contemplated
herein.
ARTICLE 5
CONDITIONS PRECEDENT TO RFC'S PERFORMANCE
5.1 CONDITIONS. RFC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 5. RFC may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by RFC of any other condition of or any of
RFC's rights or remedies, at law or in equity, if PMC shall be in default of
any of its representations, warranties, or covenants under this Agreement.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by PMC in this Agreement or in
any written statement that shall be delivered to RFC by PMC under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.3 PERFORMANCE. PMC shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against PMC on or before the Closing Date.
5.5 OFFICER'S CERTIFICATE. PMC shall have delivered to RFC a certificate,
dated the Closing Date, and signed by the Chief Executive Officer of PMC,
certifying that each of the conditions specified in Sections 5.2 through 5.5
hereof have been fulfilled.
ARTICLE 6
CONDITIONS PRECEDENT TO PMC's PERFORMANCE
6.1 CONDITIONS. The obligations of PMC hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 6. PMC may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by PMC of any other condition of or any of
PMC's other rights or remedies, at law or in equity, if RFC shall be in
default of any of their representations, warranties, or covenants under this
Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by RFC in this Agreement or in
any written statement that shall be delivered to PMC by RFC under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
6.3 PERFORMANCE. RFC shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them, on or before the Closing Date.
6.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against RFC on or before the Closing Date.
6.5 DIRECTORS OF RFC. Effective on the Closing, RFC shall have fixed the
size of its Board of Directors at five (5) persons, with a total of thirteen
(13) board seats authorized, and such Board of Directors prior to closing
shall include Xxxxxx Xxxxxx, Xxxx Xxxxxxxxx, and Xxxxx Xxxxx. The current
Officers and Directors of RFC shall elect a new slate of Directors and the
existing Directors will submit their resignations as the Officers and
Directors of RFC effective on the Closing of this transaction.
6.6 OFFICERS OF RFC. Effective on the Closing, RFC shall have elected the
following new Officers of RFC:
Xxxxxx Xxxxxx - President
Alex Mardikain - Treasurer
Xxxxxx Xxxxxx - Secretary
6.7 FORM 10-K. Prior to Closing, RFC shall have filed its Form 10-K for
the year ended August 31, 2000.
6.8 FORM 10-Q. Prior to the closing, RFC will have filed all required 10-Q
reports.
6.8 NO OUTSTANDING DEBT. Prior to the Closing, all outstanding
liabilities and obligations of RFC shall have been paid or settled, including
all costs related to this transaction.
6.9 OFFICER CERTIFICATE. RFC shall have delivered to PMC a certificate,
dated the Closing Date and signed by the President of RFC certifying that each
of the conditions specified in Sections 6.2 through 6.10 have been fulfilled.
6.10 RFC ASSETS. RFC shall have current assets of at least $1,500,000 net
of liabilities, which includes notes due from PMC of $1,000,000 and a note
from TEPI, LLC a Nevada LLC secured by real property for $500,000.00 at date
of closing without any other claims, liens, or encumbrances thereon.
ARTICLE 7
CLOSING
7.1 CLOSING. The Closing of this transaction shall be held at the
offices of Xxxxxxxx, August, and Rouquemore, 00000 Xxx Xxxxxx Xxxx. Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or such other place as shall be mutually
agreed upon, on such date as shall be mutually agreed upon by the parties, but
in no event shall the Closing be later than May 31, 2001. At the Closing:
a. PMC shall deliver the certificates representing the shares of PMC held
by the sole shareholder of PMC accepting the Exchange Offer ("Accepting
Shareholders") to RFC.
b. Shareholders shall receive a certificate or certificates representing
the number of shares of RFC Common Stock for which the shares of PMC common
stock shall have been exchanged.
c. RFC shall deliver an officer's certificate, as described in Section
6.11 hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of RFC are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
d. RFC shall deliver a signed Consent and/or Minutes of the Directors of
RFC approving this Agreement and each matter to be approved by the Directors
of RFC under this Agreement.
e. PMC shall deliver an officer's certificate, as described in Section
5.6 hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of PMC are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
f. PMC shall deliver a signed Consent or Minutes of the Directors of PMC
approving this Agreement and each matter to be approved by the Directors of
PMC under this Agreement.
g. RFC shall deliver documents transferring the signatures and powers on
all corporate and subsidiary bank accounts, brokerage accounts, and other
depositories of any kind
(1) RFC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and is duly qualified to do
business and is in good standing in each state where its business requires
qualification.
(2) RFC's authorized capital stock is as set forth in Section 3.2 hereof.
(3) The execution and consummation of this Agreement has been duly
authorized and approved by RFC's Board of Directors.
(4) Counsel has no knowledge of any litigation, proceeding or
investigation of the type described in Section 3.12 hereof.
(5) The shares of RFC's Common Stock to be issued pursuant to this
Agreement will be duly and validly authorized and issued, and will be fully
paid and nonassessable.
ARTICLE 8
POST CLOSING
8.1 Current Report on Form 8-K. Within 15 days after the Closing Date,
RFC will file a Current Report on Form 8-K with the Securities and Exchange
Commission reporting this transaction.
8.2 Limits on Reorganization or Recapitalization. For a period of 120
days following the share exchange as described in this agreement , there will
be no reorganization or recapitalization except as follows:
(1) If there is a recapitalization it will result in there being no more
than one share of stock being issued for 14 shares of stock outstanding at the
conclusion of this transaction. (A 1 for 14 reverse split.)
(2) If there are shares issued, during the 120 period, in addition to the
40,000,000 shares issued to complete this transaction by RFC then they shall
be for value of at least $3.00 per share if cash. If the shares are being
issued for any other purpose, including but not limited to, assets, services,
or for the acquisition of another company then they shall have an independent
appraise value of at $3.00 for every share so issued.
ARTICLE 9
MISCELLANEOUS
9.1 CAPTIONS AND HEADINGS. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.2 NO ORAL CHANGE. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
9.3 NON-WAIVER. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against
whom such waiver is charged; and (i) the failure of any party to insist in any
one or more cases upon the performance of any of the provisions, covenants, or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants, or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the
breach or failure of a covenant, condition, or provision hereof shall not be
deemed a waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with respect to any
other or subsequent breach.
9.4 TIME OF ESSENCE. Time is of the essence of this Agreement and of each
and every provision hereof. In the event the Closing does not take place on
or before May 31, 2001, PMC shall have the right to terminate this agreement
and shall have no further obligation hereunder. Notwithstanding the foregoing
the Closing may be extended at the sole discretion of PMC.
9.5 ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
9.6 CHOICE OF LAW. This Agreement and its application shall be governed
by the laws of the State of Nevada, except to the extent its conflict of laws
provisions would apply the laws of another jurisdiction.
9.7 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice
is to be given, on the day following depositing any notice with a recognized
courier service for delivery or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
RFC:
Royal Financial Corporation
0000 Xxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
000-000-0000
With a copy to:
Mr. Xxxxxxx Xxxxxx, Esq.
Xxxxxxx, Xxxxx, and Xxxxxx
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
000-000-0000
PMC:
Patriot Manufacturing Corporation
Xxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
000-000-0000
With a copy to:
Patriot Manufacturing Corporation
% Fedhake, August, and Xxxxxxxxx
00000 Xxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
000-000-0000
9.8 BINDING EFFECT. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
9.9 MUTUAL COOPERATION. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
9.10 ANNOUNCEMENTS. RFC and PMC will consult and cooperate with each other
as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
9.11 SCHEDULES. As of the execution hereof, the parties hereto have
provided each other with the Schedules provided for herein above, including
any items referenced therein or required to be attached thereto. Any material
changes to the Schedules hall be immediately disclosed to the other party.
9.12 USE OF COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
AGREED TO AND ACCEPTED as of the date first above written.
ROYAL FINANCIAL CORPORATION PATRIOT MANUFACTURING CORPORATION
By____________/s/____________ By_____________/s/_______________
Xxxxxxx X. Xxxxxxx, President Xxxxxx Xxxxxx, President
EXHIBIT A
APPROVAL BY THE SHAREHOLDERS
OF THE ROYAL FINANCIAL CORPORATION
EXCHANGE AGREEMENT WITH
PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
95,000 /s/___________________ Dated May 16, 2001
Shares Signature
Name _________________________
Xxx X. Kleine____________________
Address __Shares held at Union Securities_________________________________
__Vancouver, B.C._________________________________________________
260,000 /s/_____________________ Dated May 16, 2001
Shares Signature
Name ____Len P. Kleine_________
Address ____Shares held at HSBC Securities________________
____Toronto, Ontario_______________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
46,166___ ____________/s/____________________ Dated 17 May 2001_________
Shares Signature
Name ___David B. Parker_______
Address __000 Xxxxxxxxxxxx Xxxxxx #1102___________________
__Ft. Worth, TX 76102___(shares held at Xxxxxxx Xxxxx)
__15,000__ ____________/s/____custodian_______ Dated _17 May 2001________
Shares Signature
Name _________________________
Xxxxx X. Xxxxxx, Custodian
Address __000 Xxxxxxxxxxxx Xxxxxx #1102___________________
__Ft. Worth, TX 76102_____(shares held at Xxxxxxx Xxxxx)
___________________________________________________
__________ __/s/_________________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
75,000__ _________________/s/_______________ Dated _5/17/01___________
Shares Signature
Name _________________________
Xxxxxxx X. Foster_____
Address __711 Ketch Drive_________________________________
__Naples, FL 34103________________________________
__________ ____/s/_______________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
___________________________________________________
__________ ____/s/_______________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
174,000________ ____________/s/_______________________ Dated
_5/17/01____
Shares Signature
Name __L. Xxxxxxxxxxx Benson__
Address _2320 Mont Claire Drive #201______________________
_Naples, Florida 34109____________________________
__3,500________ ____________/s/_______________________ Dated
_5/17/01____
Shares Signature
Name _L. Xxxxxxxxxxx Xxxxxx-XXX
Address _2320 Mont Claire Drive #201______________________
_Naples, Florida 34109____________________________
__________ ____/s/_______________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
105,000________ ____________/s/____________________ Dated __5/17/01___
Shares Signature-President
Name __Gensen Capital______________________
Address __2320 Mont Claire Drive #201_____________________
__Naples, FL 34109________________________________
200,000________ ____________/s/____________________ Dated __5/17/01___
Shares Signature-Managing Director
Name __Silverado Holdings__________________
Address __6209 East Park Drive_____________________
__Fort Worth, TX 76132____________________________
__________ __/s/_________________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__41,010________ ____________/s/____________________ Dated __5/16/01___
Shares Signature
Name ___Charles W. Murphy___________________
Address __548 EastLake Drive_____________________
__Rio Rancho, New Mexico 87124____________________
__200,200________ ____________/s/____________________ Dated __5/16/01___
Shares Signature-Xxxxxxx X. Xxxxxx, Trustee
Xxxxxx Living Trust
Name ___Charles X. Xxxxxx, Trustee for Xxxxxx Living Trust
Address _ 000 XxxxXxxx Xxxxx_____________________
_Xxx Xxxxxx, Xxx Xxxxxx 87124-2100_______________
__________ ___/s/________________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
10,000________ ____________/s/____________________ Dated __5/17/01___
Shares Signature
Name ___Michael J. Pilgrim__________________
Address __831 Sailaway Lane, Unit #201__________
__Naples, FL 34108____________________
231,667________ ____________/s/____________________ Dated __5/17/01___
Shares Signature
Name ___Linda Pilgrim, Separate Property
Address __831 Sailaway Lane, Unit #201__________
__Naples, FL 34108____________________
__________ __/s/_________________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__10,000________ ____________/s/____________________ Dated __5/17/01___
Shares Signature
Name ___Mark X. Xxxxxxx Cust FBO Xxxxxx X. Xxxxxxx UGMA/TX
Address __8550 Meadowbrook Drive__________
__Fort Worth, TX 76120________________
______________ __/s/_________________________________ Dated ____________
Shares Signature
Name ___________________________________
Address __________________________________
__________________________________
__________ __/s_________________________________ Dated ____________
Shares Signature
Name _________________________
Address __________________________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
191,667_______ ____________/s/____________________ Dated __5/17/01___
Shares Signature
Name ___Mark J. Teinert__________________
Address __8550 Meadowbrook Drive__________
__Fort Worth, TX 76120________________
10,000____ ____/s/_______________________________ Dated ___5-17-01__
Shares Signature
Name ___Mark X. Xxxxxxx Cust FBO Xxxx X. Xxxxxxx UGMA/TX
Address __8550 Meadowbrook Drive__________
__Fort Worth, TX 76120________________
___10,000_ _____________/s/___________________ Dated ___5-17-01__
Shares Signature
Name _________________________
Address __________________________________________________
______________________________________________________Mark X. Xxxxxxx
Cust FBO Xxxx X. Xxxxxxx UGMA/TX
Address __8550 Meadowbrook Drive__________
__Fort Worth, TX 76120________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__250,000_______ ____________/s/____________________ Dated __May 18,
2001
Shares Signature
Name ___Fabian Merlo__________________
Address __Schuermattstrasse 30__________
__CH-8963 Kindhausen Switzerland
____374,000____ ______________/s/__________________ Dated ___May 18,
2001_
Shares Signature
Name ___Hansjoerg Keusch________________
Address __Backstrasse 2___________________
__XX-0000 Xxxxxx Switzerland___________
293,801__ ____/s/_____________/s/_______________ Dated __May 18, 2001___
Shares Signature
Name __Keusch & Marlo Invest AG___
Address ___Bahnhofplatz 2_______________________
___CH-8023 Zurich Switzerland___________
_______________________________________
Address ______________________________________
_____________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__329,091_______ ____________/s/____________________ Dated __May 18,
2001
Shares Signature
Name ___Franco Merlo__________________
Address __Schuermattstrasse 30__________
__CH-8963 Kindhausen Switzerland
____250,000____ ______________/s/__________________ Dated ___May 18,
2001_
Shares Signature
Name ___Marlise Merlo________________
Address __Schuermattstrasse 30__________
__XX-0000 Xxxxxxxxxx Xxxxxxxxxxx
__________ ___________________________________ Dated ____________
Shares Signature
Name _______________________________________
Address ______________________________________
_____________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__125,000_______ ____________/s/____________________ Dated __5/17/01
Shares Signature
Name ___Perri Clemmonson & R. Xxxxxx Xxxxxxxxxx (JTWROS)_____________
Address __44 Fembroke Hill__________
__Xxxxxxxxxx, XX 00000
_______________ ___________________________________ Dated ___________
Shares Signature
Name ________________________________
Address _______________________________
______________________________
__________ ___________________________________ Dated ____________
Shares Signature
Name _______________________________________
Address ______________________________________
_____________________________________
APPROVAL BY THE SHAREHOLDERS OF THE ROYAL FINANCIAL CORPORATION EXCHANGE
AGREEMENT WITH PATRIOT MANUFACTURING CORPORATION
The undersigned by their signatures thereby accept the Exchange Offer of
Royal Financial Corporation for the shares of Patriot Manufacturing
Corporation common stock, as specified and subject to the terms and
conditions set forth in the Share Exchange Agreement which has been approved
by the Boards of Directors of Patriot Manufacturing Corporation and Royal
Financial Corporation.
The undersigned further understands that approval of the Exchange Offer
constitutes consent to complete the transactions as detailed in the Exchange
Agreement.
We further represent and warranty that as of the date of our signature below,
we are the true beneficial owner of the number of shares represented next to
our signature.
__923,545_______ ____________/s/____________________ Dated _18 May 2001
Shares Signature
Name ___Heinrich Auharter___________
Address __GAG 07 82________________
__FL-9496 Balzers____________
Liechtenstein (Europe)_________
_______________ ___________________________________ Dated ___________
Shares Signature
Name ________________________________
Address ______________________________
______________________________
EXHIBIT B
MINUTES OF THE BOARD OF DIRECTORS
ROYAL FINANCIAL CORPORATION
APPROVING THE EXCHANGE AGREEMENT
ROYAL FINANCIAL CORPORATION
BOARD OF DIRECTORS MEETING - MAY 16, 2001
On Wednesday, May 16, 2001 the Board of Directors of Royal Financial
Corporation (RFC) held a meeting to discuss the proposed purchase of Patriot
Manufacturing Corporation (PMC) by RFC and the corresponding Share Exchange
Agreement versus making a cash distribution to shareholders and then seeking a
potential merger candidate for the RFC entity. In attendance were; Xxxx
Xxxxxxx and Xxxx Xxxxxxx in the Arlington, Texas RFC office along with Xxxxx
Xxxxxxx via phone from his Duncanville, Texas office and Xxxxxxx Xxxxxxx via
phone from his business office in Houston, Texas. Thus all RFC board members
participated in this meeting.
The meeting opened with a review of the most recent RFC Board Meeting,
which took place on April 17, 2001, in which the Board agreed that time and
effort should be expended to perform due diligence on the proposed acquisition
of PMC. At the April 17, 2001 meeting, it was decided that RFC would seek the
guidance of its corporate attorney, Mr. Xxxxxxx Xxxxxx of Xxxxxxx, Xxxxx and
Xxxxxx, regarding the regulatory aspects of the proposed Share Exchange
Agreement. In the April 17, 2001 meeting it was also decided that the Board
would spend the coming weeks researching which would benefit RFC Shareholders
more (1) making a cash distribution to shareholders with those cash funds in
RFC at the end of May, 2001 and then seeking a potential merger partner for
the RFC entity or (2) leaving available cash within the Company and seeking a
merger partner for the RFC entity.
Xx. Xxxxxx, of Xxxxxxx, Xxxxx and Xxxxxx, reported earlier that his
firm had completed its review of the Share Exchange Agreement. Xx. Xxxxxx'x
firm found no regulatory faults with the document or its intent.
After careful consideration and review, the Royal Financial
Corporation Board of Directors voted unanimously to leave all available cash
within the Company and to effect the purchase of PMC in accordance with the
terms and conditions set forth in the Share Exchange Agreement. The RFC Board
feels that by effecting the purchase of PMC in accordance with the terms and
conditions as set forth in the Share Exchange Agreement, that the common
shareholders of Royal Financial Corporation will be afforded the best
opportunity to derive the maximum value for their shares in the Company.
In summary, on May 16, 2001, the Board of Directors of Royal Financial
Corporation approved the Share Exchange Agreement, as it stands, and
empowered RFC's President, Xx. Xxxx Xxxxxxx, to complete the necessary
paperwork to effect the transaction as described within the Share Exchange
Agreement.
There were no other matters discussed at the May 16, 2001 meeting.
Respectfully Submitted,
---------------
Xxxx X. Xxxxxxx
Corporate Secretary
May 16, 2001
SCHEDULE 1
PATRIOT MANUFACTURING CORPORATION
("PMC ")
2.4 The Officers and Directors of PMC are as follows:
NAME POSITION
Xxxxxx Xxxxxx President and Director
Xxxxxx Xxxxxx Secretary and Treasurer
Xxxx Xxxxxxxxx Vice President
2.9 Trade Names and Rights:
a) None
2.17 Contracts:
RFC has notes due from PMC to RFC in an amounts totaling $1,000,000.
Note from TEPI, LLC a Nevada LLC in the amount of $500,000 secured by real
property.
SCHEDULE 2
ROYAL FINANCIAL CORPORATION
OUTSTANDING OPTIONS
OPTION HOLDER AMOUNT EXERCISE PRICE EXPIRATION DATE
Xxxxx Xxxxxxxx 10,000 $2.25 April 2002
Xxxxx Xxxxxx 10,000 $2.25 April 2002
Xxxx Xxxxxxx 250,000 $2.25 April 2002
10,000 $2.25 April 2002
10,000 $4.25 April 2003
10,000 $0.20 December 2004
Xxxxx Xxxxxxx 100,000 $2.25 April 2002
10,000 $2.25 April 2002
10,000 $4.25 April 2003
10,000 $0.20
December 2004
Xxxxx Xxxxxx 250,000 $2.25 April 2002
Xxxx Xxxxxxx 250,000 $2.25 April 2002
10,000 $4.25 April 2003
10,000 $0.20 December 2004
EPP 200,000 $2.25 April 2002
Royal Mortgage 55,000 $2.25 April 2002
Xxxxx Xxxxx 20,000 $2.25 April 2002
Xxxxx Xxxxx 25,000 $2.25 April 2002
Xxxxxxx Xxxxxxx 10,000 $4.25 April 2003
10,000 $0.20 December 2004
Xxxxxxx Xxxxx 10,000 $4.25 April 2003
Xxxxxxx Xxxxxxxx 10,000 $2.25 April 2002
Xxxxxxx Xxxxxx 10,000 $2.25 April 2002
Xxx Xxxxxx 20,000 $2.25 April 2003
Coffin Communications 20,000 $2.75 July 2003
TOTAL OPTIONS 1,330,000
SCHEDULE 3
Royal Financial Corporation
("RFC")
3.4 Directors and Officers of RFC:
Name Position
Xxxxxxx X. Xxxxxxx President and Director
Xxxx X. Xxxxxxx Secretary and Director
Xxxxx Xxxxxxx Director
Xxxxxxx Xxxxxxx Director
3.20 Material Contracts of RFC:
None
EXCHANGE OFFER FOR THE COMMON STOCK OF
Patriot Manufacturing Corporation
LETTER OF ACCEPTANCE
Name of Shareholder: 40,000,000 Shares of Royal Financial
Corporation
_______B.B.D.S.M. CORPORATION______
Common Stock offered for your 50
Shares of Patriot Manufacturing
Corporation.
Common Stock
_______________________________
=============================================================================
THIS FORM MUST BE COMPLETED AND DELIVERED ON OR BEFORE 4:00 P.M. PACIFIC TIME,
MAY 31, 2001.
=============================================================================
APPROVAL OR NONAPPROVAL OF EXCHANGE OFFER
The undersigned [ ] accepts [ ] rejects the Exchange Offer of Royal Financial
Corporation for his or her shares of Patriot Manufacturing Corporation common
stock, as specified above subject to the terms and conditions set forth in the
Share Exchange Agreement to be executed between Patriot Manufacturing
Corporation and Royal Financial Corporation
The undersigned understands that approval of the Exchange Offer constitutes
(i) his or her approval of the terms and conditions of the Exchange Offer, and
the complete transfer of all of his or her shares of Patriot Manufacturing
Corporation common stock to Royal Financial Corporation, and (ii) his or her
acknowledgment and agreement that the shares of Common Stock of Royal
Financial Corporation will be full payment for all of his or her shares of
Patriot Manufacturing Corporation
Date: ___MAY 23, 2001________ ______BBDSM
CORPORATION________________
______________/s/___________________________
Signature of Shareholder AS PRESIDENT
(NOTE: IF YOU ACCEPT THE EXCHANGE OFFER, YOU MUST ALSO SIGN ON PAGE 3 OF THIS
LETTER OF ACCEPTANCE. IN ADDITION, YOU MUST ENDORSE YOUR STOCK CERTIFICATE(S)
AND RETURN THEM WITH THIS LETTER OF ACCEPTANCE.)
REPRESENTATIONS AND WARRANTIES
1. The undersigned understands and acknowledges that the shares of Common
Stock ("Shares") of Royal Financial Corporation (the "Company"), are being
offered in reliance upon the exemptions provided in Section 4(2), 4(6) and/or
3(b) of the Securities Act of 1933 as amended (the "Securities Act") and the
Rules and Regulations adopted thereunder relating to nonpublic offerings; and
the undersigned makes the following representations and warranties with the
intent that the same may be relied upon in determining the suitability of the
undersigned as a purchaser of securities:
(a) The Shares will be acquired solely for the account of the undersigned,
for investment purposes only, and not with a view to, or for sale in
connection with, any distribution thereof and with no present intention of
distributing or reselling any part of the Shares.
(b) The undersigned agrees not to dispose of his or her Shares or any
portion thereof unless and until counsel for the Company shall have determined
that the intended disposition is permissible and does not violate the
Securities Act or any applicable state securities laws, or the rules and
regulations thereunder.
(c) The undersigned acknowledges that the Company has made all
documentation pertaining to all aspects of the Exchange Offer available to him
or her and has offered such person or persons an opportunity to discuss the
Exchange Offer with the officers of the Company. Included in such
documentation are copies of the Company's Form 10-KSB for the year ended
August 31, 2000, and the Form 10-QSB for the three months ended February 28,
2001, and a copy of the Share Exchange Agreement. The undersigned further
acknowledges and represents to the Company that he or she is a knowledgeable,
sophisticated investor who can fend for himself or herself and has adequate
means to make the investment contemplated herein; and that, in connection with
this investment, he or she has obtained the necessary investment advice from
appropriate outside sources, and had available to the undersigned all
information with respect to the Company which was deemed necessary by himself
or herself and his or her respective advisors.
2. The undersigned represents that the shares of Patriot Manufacturing
Corporation being exchanged are owned free and clear of any liens or
encumbrances and have not been pledged, assigned, sold, or optioned to any
person.
3. The undersigned understands that he or she must bear the economic risk
of an investment in the Shares to be acquired pursuant to the Exchange Offer
for an indefinite period of time because the Shares have not been registered
under the Securities Act or any state securities laws and, therefore, cannot
be sold unless they are subsequently registered under the Securities Act and
any applicable state securities laws or unless exemptions from such
registrations are available. The current holding period requirement of Rule
144 is one year from the date this transaction is closed, and sales may
thereafter be made only in compliance with the requirements of that Rule. The
undersigned acknowledges that only the Company can file a registration
statement, and that the Company has no obligation to do so or to take steps
necessary to make an exemption from registration available to the undersigned.
4. The undersigned agrees that the certificate evidencing the Shares he
or she acquires pursuant to the Exchange Offer will have a legend placed
thereon stating that the Shares have not been registered under the Securities
Act or any state securities laws and setting forth or referring to the
restrictions on transferability and sale of the Shares.
5. (a) The undersigned is, or is not, an "accredited investor," as
that term is defined in Regulation D under the Securities Act of 1933, as
amended (the "Act"), as checked below:
[X] YES [ ] NO
(b) If "Yes," I come within the following category of that definition
(check as applicable):
1. [ ] I am a natural person whose present net worth (or whose joint
net worth with my spouse) exceeds $1,000,000.
2. [ ] I am a natural person who had individual income in excess of
$200,000 in each of the last two years or joint income with my spouse in
excess of $300,000 during such two years, and I reasonably expect to have the
same income level in the current year.
3. [ ] I am an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust or
partnership not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
4. [X] I am an entity, all of whose equity owners are accredited
investors under paragraph 1, 2 and 3, above.
(c) If I have answered yes to (5)(a) above, I understand that Regulation D
requires that you have information which causes you to have a reasonable
belief that the foregoing statement is correct. Thus, if you care to do so,
you may contact my bank, my accountant or other persons whom I designate below
to corroborate the above. The name and telephone number of:
(i) My banker is ________UNION BANK OF CALIFORNIA________
_______________________________________________;
(ii) My accountant is _______BELDES XXXXXXXXX & CO_________
___________________________________________; and
(iii) Other person is _____________________________
________________________________________________.
6. The undersigned hereby covenants and agrees to protect, indemnify and
hold the Company, and each of its officers, directors and shareholders,
harmless from and against any and all claims, demands, causes of action,
judgments, orders, decrees, damages, liabilities, court or other costs,
attorney fees, reasonable costs of investigation and other costs and expenses
whatsoever (i) arising out of or attributable to any breach or violation of,
or the falsity, inaccuracy or failure of, any representation, warranty or
covenant made by the undersigned in this letter, and (ii) arising from or
related to the acquisition, ownership or disposition by the undersigned of any
or all the Shares.
7. The undersigned's jurisdiction of residence is _____CALIFORNIA____.
___________________________________
___________________________________ ___________/s/___________________
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
___________________________________ ___________/s/__________________
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
___________________________________
(Mailing Address)
___________________________________ Date:____________________________
