AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
VANGUARD ENTERPRISES, INC.
AND
CIRCLE OF FIRE STUDIOS, INC.
TABLE OF CONTENTS
1. Plan of Reorganization......................................1
2. Exchange of Shares..........................................1
3. Pre-Closing Events..........................................2
4. Exchange of Securities......................................2
5. Other Events Occurring at Closing...........................3
6. Delivery of Shares..........................................4
7. Representations of Circle Stockholders......................4
8. Representatiions of Circle..................................4
9. Representations of Vanguard and Xxxxx.......................6
10. Closing....................................................8
11. Conditions Precedent to the Obligations of Circle..........8
12. Conditions Precedent to the Obligations of Vanguard ......10
13. Indemnification...........................................10
14. Nature and Survival of Representations....................11
15. Documents at Closing......................................11
16. Finder's Fees.............................................12
17. Miscellaneous.............................................12
Signature Page..........................................................13
Exhibit A - Circle Stockholder Schedule
Exhibit B - Amendment to Articles of Incorporation
Exhibit C - Investment Letter
(i)
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement")
is entered into effective as of this day of January, 1999, by and among Vanguard
Enterprises, Inc., a Delaware corporation (hereinafter "Vanguard"); Xxxx Xxxxx,
the principal shareholder of Vanguard (hereinafter "Xxxxx"); Circle of Fire
Studios, Inc., a Nevada corporation (hereinafter "Circle"), and the owners of
all the outstanding shares of common stock of Circle (hereinafter the "Circle
Stockholders").
RECITALS:
WHEREAS, the Circle Stockholders own all of the issued and outstanding
common stock of Circle which comprises 3,535,907 shares (the "Circle Common
Stock"). Vanguard desires to acquire the Circle Common Stock solely in exchange
for voting common stock of Vanguard, making Circle a wholly-owned subsidiary of
Vanguard; and
WHEREAS, the Circle Stockholders (as set forth on the attached Exhibit
"A") desire to acquire voting common stock of Vanguard in exchange for the
Circle Common Stock, as more fully set forth herein.
NOW THEREFORE, for the mutual consideration set out herein and other
good and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. It is hereby agreed that all of the Circle
Common Stock shall be acquired by Vanguard in exchange solely for Vanguard
common voting stock (the "Vanguard Shares"). It is the intention of the parties
hereto that all of the issued and outstanding shares of capital stock of Circle
shall be acquired by Vanguard in exchange solely for Vanguard common voting
stock and that this entire transaction qualify as a corporate reorganization
under Section 368(a)(1)(B) and/or Section 351 of the Internal Revenue Code of
1986, as amended, and related or other applicable sections thereunder.
2. Exchange of Shares. Vanguard and Circle Stockholders agree that on
the Closing Date or at the Closing as hereinafter defined, the Circle Common
Stock shall be delivered at Closing to Vanguard in exchange for the Vanguard
Shares, after giving effect to a 2 to 1 reverse stock split (the "Vanguard
Reverse Stock Split") as to all presently outstanding shares of Vanguard common
stock, as follows:
(a) At Closing, Vanguard shall, subject to the conditions set forth
herein, issue an aggregate of 8,149,816 shares of Vanguard common stock (after
giving effect to the Vanguard Reverse Stock Split) for immediate delivery to the
Circle Stockholders in exchange for Vanguard Shares.
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(b) Each Circle Stockholder shall execute this Agreement or a written
consent to the exchange of their Circle Common Stock for Vanguard Shares.
(c) Unless otherwise agreed by Vanguard and Circle this transaction
shall close only in the event Vanguard is able to acquire at least 80% of the
outstanding Circle Common Stock; however, it is the intent of the parties to
have Vanguard acquire all of the Circle Common Stock.
3. Pre-Closing Events. The Closing is subject to the completion of the
following:
(a) Vanguard shall have authorized 50,000,000 shares of $.001 par value
common stock and 500,000 shares of $.001 par value preferred stock. The
preferred stock shall be subject to issuance in such series and with such
rights, preferences and designations as determined in the sole discretion of the
board of directors.
(b) Vanguard shall have effectuated the Vanguard Reverse Stock Split at
or prior to Closing, and shall have 500,000 shares of its common stock issued
and outstanding and no other shares of capital stock issued or outstanding.
(c) Vanguard shall demonstrate to the reasonable satisfaction of Circle
that it has no material assets and no liabilities contingent or fixed.
(d) Circle shall demonstrate to the reasonable satisfaction of Vanguard
that it has resolved and settled all ongoing litigation with former owners of
Circle re ownership and use of assets of Circle and that Circle has clear title
to its intellectual property.
4. Exchange of Securities. As of the Closing Date each of the following
shall occur:
(a) All shares of Circle Common Stock issued and outstanding
immediately prior to the Closing Date shall be exchanged for the Vanguard Shares
(up to an aggregate amount of 8,149,816 Vanguard Shares to be delivered at
Closing). All such outstanding shares of Circle Common Stock shall be deemed,
after Closing, to be owned by Vanguard. The holders of such certificates
previously evidencing shares of Circle Common Stock outstanding immediately
prior to the Closing Date shall cease to have any rights with respect to such
shares of Circle Common Stock except as otherwise provided herein or by law;
(b) Any shares of Circle Common Stock held in the treasury of Circle
immediately prior to the Closing Date shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto;
(c) The 500,000 shares of Vanguard common stock previously issued and
outstanding prior to the Closing, after giving effect to the Vanguard Reverse
Split, will remain outstanding.
5. Other Events Occurring at Closing. At Closing, the following shall
be accomplished:
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(a) Vanguard shall file an amendment to its Certificate of
Incorporation with the Secretary of State of the State of Delaware in
substantially the form attached hereto as Exhibit "B" effecting an amendment to
its Certificate of Incorporation to reflect a name change Xxxxxxxxxxxx.Xxx, Inc.
as set forth in the attached Exhibit "B".
(b) The resignation of the existing Vanguard officer and director and
appointment of new officers and directors as directed by Circle.
(c) Vanguard shall have completed a limited offering under Regulation
D, Rule 504, as promulgated by the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended, of up to 2,000,000 (but no less
than 550,000 shares) shares of its common stock at $.50 per share. The gross
proceeds of this offering (the "Vanguard Financing") shall be up to $1,000,000,
(but no less than $275,000) which amount, less agreed upon costs, shall be
delivered to the control of new management of Vanguard at Closing in good funds
or shall be represented by the conversion of previous loans to Circle arranged
for by Baytree. The Vanguard Financing shall have been completed in compliance
with all applicable state and federal securities laws and the securities sold
shall be delivered at Closing to the investors in the Vanguard Financing.
Persons who have loaned money to Circle, up to $1,000,000, shall be given the
opportunity to convert the principal of said loans to the purchase of shares in
the limited offering prior to Closing upon the same terms as other investors in
the limited offering.
(d) It is recognized by the parties hereto that Circle entered into an
agreement including all amendments thereto (the "Baytree Agreement" originally
dated October 30 1998, with Baytree Capital Associates, LLC ("Baytree") wherein
Baytree agreed to identify a public company to be involved in a "reverse merger"
with Circle, and that Vanguard is the public company agreed to by Baytree and
Circle. Under said Baytree Agreement, at Closing of the transactions described
herein, Vanguard shall issue 20,000 shares of its common stock (after given
effect to the Vanguard Reverse Stock Split) to Baytree for each $100,000 (or
part thereof above the minimum of $275,000) raised in the Vanguard Financing.
These shares are deemed to be covered by the defined term "Vanguard Shares" as
set forth herein for purposes of all representations and warranties of Vanguard
and the legal opinion given on behalf of Vanguard herein. Out of the proceeds of
the Vanguard Financing (as further defined herein) there shall be paid at
Closing, a non-accountable expense allowance of $30,000 to Baytree and the fees
and reasonable disbursements of Baytree and Acquiror's legal counsel not to
exceed $30,000.00 (to be paid from the proceeds of the Vanguard Financing).
Furthermore, Vanguard recognizes and hereby assumes, at Closing, the obligations
of Circle set forth in the Baytree Agreement including the obligation to
register shares of its common stock issued to Baytree hereunder at the request
of Baytree in accordance with the express terms and conditions of said Baytree
Agreement including "Piggyback" registration rights and further acknowledges its
obligation to issue stock under the terms of the Baytree Agreement for six
months after any initial Closing in the event the entire Financing has not been
completed at the initial Closing and additional amounts are thereafter financed,
at the discretion of Circle, pursuant to the terms of the Baytree Agreement.
(e) Vanguard shall issue warrants to certain warrantholders of Circle
(as set forth on Exhibit "A") in exchange for outstanding warrants of Circle.
The Vanguard warrants issued shall cover an aggregate of 484,023 post split
shares exercisable at varying prices and subject to terms similar to the Circle
options for which they are being exchanged.
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(f) Vanguard shall adopt a Stock Option Plan at Closing to include up
to 1,000,000 shares of its common stock. The Plan shall include "incentive"
stock options under Section 422 of the Internal Revenue Code of 1986, as amended
and other options and similar rights. Vanguard shall grant options under said
plan to employees and others, at Closing, exercisable at $.50 per share, as
designed by Circle subject to the reasonable approval of Vanguard.
6. Delivery of Shares. On or as soon as practicable after the Closing
Date, Circle will use its best efforts to cause the Circle Stockholders to
surrender certificates for cancellation representing their shares of Circle
Common Stock, against delivery of certificates representing the Vanguard Shares
for which the shares of Circle Common Stock are to be exchanged at Closing.
7. Representations of Circle Stockholders. Each Circle Stockholder
hereby represents and warrants each only as to its own Circle Common Stock,
effective this date and the Closing Date as follows:
(a) Except as may be set forth in Exhibit "A", the Circle Common Stock
is free from claims, liens, or other encumbrances, and at the Closing Date said
Circle Stockholder will have good title and the unqualified right to transfer
and dispose of such Circle Common Stock.
(b) Said Circle Stockholder is the sole owner of the issued and
outstanding Circle Common Stock as set forth in Exhibit "A";
(c) Said Circle Stockholder has no present intent to sell or dispose of
the Vanguard Shares and is not under a binding obligation, formal commitment, or
existing plan to sell or otherwise dispose of the Vanguard Shares.
8. Representations of Circle. Circle hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date:
(a) Except as noted on Exhibit "A", the Circle Stockholders listed on
the attached Exhibit "A" are the sole owners of record and beneficially of the
issued and outstanding common stock of Circle.
(b) Circle has no outstanding or authorized capital stock, warrants,
options or convertible securities other than as described in the Circle
Financial Statements or in Exhibit "A", attached hereto.
(c) The unaudited financial statements as of and for the periods ended
December 31, 1997 and October 27, 1998, which have been (or will be prior
dissemination of an Information Statement by Vanguard) delivered to Vanguard
(hereinafter referred to as the "Circle Financial Statements") are complete and
accurate and fairly present the financial condition of Circle as of the dates
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thereof and the results of its operations for the periods covered. There are no
material liabilities or obligations, either fixed or contingent, not disclosed
in the Circle Financial Statements or in any exhibit thereto or notes thereto
other than contracts or obligations in the ordinary course of business; and no
such contracts or obligations in the ordinary course of business constitute
liens or other liabilities which materially alter the financial condition of
Circle as reflected in the Circle Financial Statements. Circle has good title to
all assets shown on the Circle Financial Statements subject only to dispositions
and other transactions in the ordinary course of business, the disclosures set
forth therein and liens and encumbrances of record. The Circle Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Circle as of the
dates thereof and the results of its operations and changes in financial
position for the periods then ended.
(d) Since the date of the Circle Financial Statements, there have not
been any material adverse changes in the financial position of Circle except
changes arising in the ordinary course of business, which changes will in no
event materially and adversely affect the financial position of Circle.
(e) Circle is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the Circle Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened
against Circle.
(f) Circle is in good standing in its jurisdiction of incorporation,
and is in good standing and duly qualified to do business in each jurisdiction
where required to be so qualified except where the failure to so qualify would
have no material negative impact on Circle.
(g) Circle has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing Date.
(h) Circle has not materially breached any material agreement to which
it is a party. Circle has previously given Vanguard copies or access thereto of
all material contracts, commitments and/or agreements to which Circle is a party
including all relationships or dealings with related parties or affiliates.
(i) Circle has no subsidiary corporations except as described in
writing to Vanguard.
(j) Circle has made all material corporate financial records, minute
books, and other corporate documents and records available for review to present
management of Vanguard prior to the Closing Date, during reasonable business
hours and on reasonable notice.
(k) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which Circle is a party and has
been duly authorized by all appropriate and necessary corporate action under
Delaware of other applicable law and Circle, to the extent required, has
obtained all necessary approvals or consents required by any agreement to which
Circle is a party.
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(l) All disclosure information regarding Circle which is to be set
forth in disclosure documents of Vanguard or otherwise delivered to Vanguard by
Circle for use in connection with the transaction (the "Acquisition") described
herein is true, complete and accurate in all material respects.
9. Representations of Vanguard and Xxxxx. Vanguard, and Xxxxx to the
best of his knowledge, hereby jointly and severally represent and warrant as
follows, each of which representations and warranties shall continue to be true
as of the Closing Date:
(a) As of the Closing Date, the Vanguard Shares, to be issued and
delivered to the Circle Stockholders hereunder will, when so issued and
delivered, constitute, duly authorized, validly and legally issued shares of
Vanguard common stock, fully-paid and nonassessable. Vanguard shall have
completed its reverse stock split wherein each holder of Vanguard Shares shall
have received one share of the Vanguard Shares for each two Vanguard Shares
previously held. The total number of Vanguard Shares outstanding shall be
500,000. No shares of Vanguard's preferred stock, $0.001 shall be outstanding.
(b) Vanguard has the corporate power to enter into this Agreement and
to perform its respective obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the board of directors of Vanguard. The execution and
performance of this Agreement will not constitute a material breach of any
agreement, indenture, mortgage, license or other instrument or document to which
Vanguard is a party and will not violate any judgment, decree, order, writ,
rule, statute, or regulation applicable to Vanguard or its properties. The
execution and performance of this Agreement will not violate or conflict with
any provision of the Certificate of Incorporation or by-laws of Vanguard.
(c) Vanguard has delivered to Circle a true and complete copy of its
audited financial statements for the years ended December 31, 1996 and 1997, and
unaudited financial statements for the nine months ended September 30, 1998,
(the "Vanguard Financial Statements"). The Vanguard Financial Statements are
complete, accurate and fairly present the financial condition of Vanguard as of
the dates thereof and the results of its operations for the periods then ended.
There are no material liabilities or obligations either fixed or contingent not
reflected therein. The Vanguard Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and fairly
present the financial position of Vanguard as of the dates thereof and the
results of its operations and changes in financial position for the periods then
ended.
(d) Since September 30, 1998, there have not been any material adverse
changes in the financial condition of Vanguard except with regard to
disbursements to pay reasonable and ordinary expenses in connection with
maintaining its corporate status and pursuing the matters contemplated in this
Agreement. Prior to Closing, all accounts payable and other liabilities of
Vanguard shall be paid and satisfied in full and Vanguard shall have no
liabilities either contingent or fixed.
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(e) Vanguard is not a party to or the subject of any pending
litigation, claims, or governmental investigation or proceeding not reflected in
the Vanguard Financial Statements or otherwise disclosed herein, and there are
no lawsuits, claims, assessments, investigations, or similar matters, to the
best knowledge of Xxxxx, threatened or contemplated against or affecting
Vanguard, its management or its properties.
(f) Vanguard is duly organized, validly existing and in good standing
under the laws of the State of Delaware; has the corporate power to own its
property and to carry on its business as now being conducted and is duly
qualified to do business in any jurisdiction where so required except where the
failure to so qualify would have no material negative impact on it.
(g) Vanguard has filed all federal, state, county and local income,
excise, property and other tax, governmental and/or related returns, forms, or
reports, which are due or required to be filed by it prior to the date hereof,
except where the failure to do so would have no material adverse impact on
Vanguard, and has paid or made adequate provision in the Vanguard Financial
Statements for the payment of all taxes, fees, or assessments which have or may
become due pursuant to such returns or pursuant to any assessments received.
Vanguard is not delinquent or obligated for any tax, penalty, interest,
delinquency or charge.
(h) There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital stock
or other securities of Vanguard, except as contemplated in this Agreement.
(i) The corporate financial records, minute books, and other documents
and records of Vanguard have been made available to Circle prior to the Closing
and shall be delivered to new management of Vanguard at Closing.
(j) Vanguard has not breached, nor is there any pending, or to the
knowledge of management, any threatened claim that Vanguard has breached, any of
the terms or conditions of any agreements, contracts or commitments to which it
is a party or by which it or its assets are is bound. The execution and
performance hereof will not violate any provisions of applicable law or any
agreement to which Vanguard is subject. Vanguard hereby represents that it has
no business operations or material assets and it is not a party to any material
contract or commitment other than appointment documents with its transfer agent,
and that it has disclosed to Circle all relationships or dealings with related
parties or affiliates.
(k) Vanguard common stock is currently approved for quotation on the
OTC Bulletin Board under the symbol "XXXX" and there are no stop orders in
effect with respect thereto.
(l) All information regarding Vanguard which has been provided to
Circle or otherwise disclosed in connection with the transactions contemplated
herein, is true, complete and accurate in all material respects. Vanguard and
Xxxxx specifically disclaim any responsibility regarding disclosures as to
Circle, its business or its financial condition.
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10. Closing. The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually determined by the parties
hereto when all conditions precedent have been met and all required documents
have been delivered, which Closing is expected to take place on or about January
21, 1999, but no later than February 12, 1999, unless extended by mutual consent
of all parties hereto. The "Closing Date" of the transactions described herein
(the "Acquisition"), shall be that date on which all conditions set forth herein
have been met and the Vanguard Shares are issued in exchange for the Circle
Common Stock.
11. Conditions Precedent to the Obligations of Circle. All obligations
of Circle under this Agreement are subject to the fulfillment, prior to or as of
the Closing and/or the Closing Date, as indicated below, of each of the
following conditions:
(a) The representations and warranties by or on behalf of Xxxxx and
Vanguard contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at and
as of the Closing and Closing Date as though such representations and warranties
were made at and as of such time.
(b) Vanguard shall have performed and complied with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Closing.
(c) On or before the Closing, the board of directors, and shareholders
representing a majority interest the outstanding common stock of Vanguard, shall
have approved in accordance with applicable state corporation law the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein.
(d) On or before the Closing Date, Vanguard shall have delivered to
Circle certified copies of resolutions of the board of directors and
shareholders of Vanguard approving and authorizing the execution, delivery and
performance of this Agreement and authorizing all of the necessary and proper
action to enable Vanguard to comply with the terms of this Agreement including
the election of Circle's nominees to the Board of Directors of Vanguard and all
matters outlined herein.
(e) The Acquisition shall be permitted by applicable law and Vanguard
shall have sufficient shares of its capital stock authorized to complete the
Acquisition.
(f) At Closing, the existing sole officer and director of Vanguard
shall have resigned in writing from all positions as director and officer of
Vanguard effective upon the election and appointment of the Circle nominees.
(g) At the Closing, all instruments and documents delivered to Circle
and Circle Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for Circle.
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(h) The shares of restricted Vanguard capital stock to be issued to
Circle Stockholders and in the Vanguard Financing at Closing will be validly
issued, nonassessable and fully-paid under Delaware corporation law and will be
issued in compliance with all federal, state and applicable corporation and
securities laws.
(i) Circle and Circle Stockholders shall have received the advice of
their tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) Circle shall have received all necessary and required approvals and
consents from required parties and its shareholders.
(k) Vanguard shall have completed at least $275,000 of the Vanguard
Financing.
(l) At the Closing, Vanguard shall have delivered to Circle an opinion
of its counsel dated as of the Closing to the effect that:
(i) Vanguard is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by Vanguard and is a valid and binding obligation of Vanguard
enforceable in accordance with its terms;
(iii) Vanguard through its board of directors and stockholders
has taken all corporate action necessary for performance under this
Agreement;
(iv) The documents executed and delivered by Vanguard to
Circle and Circle Stockholders hereunder are valid and binding in
accordance with their terms and vest in Circle Stockholders, as the
case may be, all right, title and interest in and to the Vanguard
Shares to be issued pursuant to the terms hereof, and the Vanguard
Shares when issued will be duly and validly issued, fully-paid and
nonassessable;
(v) Vanguard has the corporate power to execute, deliver and
perform under this Agreement;
(vi) Legal counsel for Vanguard is not aware of any
liabilities, claims or lawsuits involving Vanguard;
12. Conditions Precedent to the Obligations of Vanguard. All
obligations of Vanguard under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
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(a) The representations and warranties by Circle and Circle
Stockholders contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof shall be true in all material
respects at and as of the Closing as though such representations and warranties
were made at and as of such time.
(b) Circle shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing;
(c) Circle shall deliver on behalf of the Circle Stockholders a letter
commonly known as an "Investment Letter," signed by each of said shareholders,
in substantially the form attached hereto as Exhibit "C", acknowledging that the
Vanguard Shares are being acquired for investment purposes.
(d) Circle shall deliver an opinion of its legal counsel to the effect
that:
(i) Circle is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business in any jurisdiction
where so required except where the failure to so qualify would have no
material adverse impact on Circle;
(ii) This Agreement has been duly authorized, executed and
delivered by Circle.
(iii) The documents executed and delivered by Circle and
Circle Stockholders to Vanguard hereunder are valid and binding in
accordance with their terms and vest in Vanguard all right, title and
interest in and to the Circle Common Stock, which stock is duly and
validly issued, fully-paid and nonassessable.
13. Indemnification. For a period of one year from the Closing,
Vanguard and Xxxxx agree to jointly and severally indemnify and hold harmless
Circle, and Circle agrees to indemnify and hold harmless Vanguard and Xxxxx, at
all times after the date of this Agreement against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fees incident to
any of the foregoing, resulting from any material misrepresentations made by an
indemnifying party to an indemnified party, an indemnifying party's breach of
covenant or warranty or an indemnifying party's nonfulfillment of any agreement
hereunder, or from any material misrepresentation in or omission from any
certificate furnished or to be furnished hereunder.
14. Nature and Survival of Representations. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for one
year from the Closing. All of the parties hereto are executing and carrying out
the provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement and not upon
any investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
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15. Documents at Closing. At the Closing, the following documents
shall be delivered:
(a) Circle will deliver, or will cause to be delivered, to Vanguard the
following:
(i) a certificate executed by the President and Secretary of
Circle to the effect that all representations and warranties made by
Circle under this Agreement are true and correct as of the Closing, the
same as though originally given to Vanguard on said date;
(ii) a certificate from the jurisdiction of incorporation of
Circle dated at or about the Closing to the effect that Circle is in
good standing under the laws of said jurisdiction;
(iii) Investment Letters in the form attached hereto as
Exhibit "C" executed by each Circle Stockholder;
(iv) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of this
Agreement;
(v) certified copies of resolutions adopted by the
shareholders and directors of Circle authorizing this transaction; and
(vi) all other items, the delivery of which is a condition
precedent to the obligations of Vanguard as set forth herein.
(vii) the legal opinion required by Section 12(d) hereof.
(b) Vanguard will deliver or cause to be delivered to Circle:
(i) stock certificates representing the Vanguard Shares to be
issued as a part of the stock exchange as described herein;
(ii) a certificate of the President of Vanguard, to the effect
that all representations and warranties of Vanguard made under this
Agreement are true and correct as of the Closing, the same as though
originally given to Circle on said date;
(iii) certified copies of resolutions adopted by Vanguard's
board of directors and Vanguard's Stockholders authorizing the
Acquisition and all related matters described herein;
(iv) certificate from the jurisdiction of incorporation of
Vanguard dated at or about the Closing Date that Vanguard is in good
standing under the laws of said state;
(v) opinion of Vanguard's counsel as described in Section
11(l) above;
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(vi) such other instruments and documents as are required to
be delivered pursuant to the provisions of this Agreement;
(vii) resignation of the existing officer and director of
Vanguard;
(viii) all corporate and financial records of Vanguard; and
(ix) all other items, the delivery of which is a condition
precedent to the obligations of Circle, as set forth in Section 12
hereof.
16. Finder's Fees. Vanguard, represents and warrants to Circle, and
Circle represents and warrants to Vanguard that neither of them, or any party
acting on their behalf, has incurred any liabilities, either express or implied,
to any "broker" of "finder" or similar person in connection with this Agreement
or any of the transactions contemplated hereby other than the arrangements
described in Section 5(d) hereof. In this regard, Vanguard, on the one hand, and
Circle on the other hand, will indemnify and hold the other harmless from any
claim, loss, cost or expense whatsoever (including reasonable fees and
disbursements of counsel) from or relating to any such express or implied
liability other than as disclosed herein.
17. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after the
Closing Date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
(c) Amendment. This Agreement may be amended only in writing as agreed
to by all parties hereto.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first class registered or certified mail, return receipt requested.
(e) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14
(g) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware.
(h) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed upon
or understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
VANGUARD ENTERPRISES, INC.
By:___________________________________
Xxxx Xxxxx, President and Secretary
________________________________________
Xxxx Xxxxx, individually
CIRCLE OF FIRE STUDIOS, INC.
By: ______________________________ By: __________________________________
X.X. XxXxxxxxx, Secretary Xxxxxxx X. Xxxx, President
ASSOCIATED CORPORATE SERVICES SHAREHOLDERS OF CIRCLE OF FIRE
STUDIOS, INC.
By:_______________________________ ______________________________________
Xxxxxxx X. Xxxx
__________________________________ ______________________________________
Xxxxxxx Xxxx, Sr. X. X. XxXxxxxxx
__________________________________ ______________________________________
Xxxxx Xxxxxxxx Xxxxx Xxxx
__________________________________ SCANDINAVIA ONLINE
Xxxxxx Xxxxx
__________________________________ By: ______________________________
Xxxxxx Xxxxxx
__________________________________
Xxxxxx Xxxxx
15
EXHIBIT "A"
To Agreement and Plan of Reorganization
List of Circle Stockholders
Circle Vanguard Shares to
Name Shares be Issued at Closing
---- ------ ---------------------
Xxxxxxx X. Xxxx 1,641,500 3,783,449
X.X. XxXxxxxxx 1,620,141 3,734,219
Xxxxx Xxxx 10,641 24,526
Scandinavia Online 67,000 154,427
Associated Corporate Services 50,000 115,244
Xxxxxxx Xxxx, Sr. 18,000 41,488
Xxxxx Xxxxxxxx 5,000 11,524
Xxxxxx Xxxxx 50,000 115,244
Xxxxxx Xxxxxx 8,625 19,879
Xxxxxx Xxxxx 65,000 149,816
3,535,907 8,149,816
========= =========
List of Circle Option Holders
Circle Shares Circle Exercise Number of Vanguard Exercise
Name Under Option Price Shares under Option Price
---- ------------- --------------- -------------------- --------
Xxxxxx Xxxxxx 25,000 $1.00 57,622 $.43
25,000 $1.00 57,622 $.43
Xxxx Xxxxxxxx 150,000 $1.00 345,730 $.43
Xxxxxx Xxxxx 10,000 $1.00 23,049 $.43
------- -------
210,000 484,023
======= =======
EXHIBIT "B"
To Agreement and Plan of Reorganization
Form of Amendment to Certificate of Incorporation
VANGUARD ENTERPRISES, INC.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
Vanguard Enterprises, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
1st: That by unanimous written consent of the Board of Directors of
Vanguard Enterprises, Inc., a resolution was duly adopted setting forth a
proposed amendment to the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and proposing approval by the
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the FIRST article thereof so that,
as amended, said Article shall read as set forth below:
FIRST: The name of this corporation shall be:
Xxxxxxxxxxxx.xxx, Inc.
2nd: The Corporation has effectuated a 2 to 1 reverse stock split
effective with the commencement of business on January 22, 1999, as to shares
outstanding at the opening of business on January 21, 1999. Said reverse split
reduces the outstanding shares from 1,000,000 shares to 500,000 shares but does
not reduce the Corporation's authorized shares of common stock.
3rd: That thereafter, pursuant to resolution of its Board of Directors,
a written approval by majority consent of the stockholders of said Corporation
was duly received in accordance with the General Corporation law of the State of
Delaware, by which consent the necessary number of shares as required by statute
were voted in favor of the amendment.
4th: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware, and the necessary number of shares as required by statute were voted
in favor of the amendment.
IN WITNESS WHEREOF, said Vanguard Enterprises, Inc., has caused this
certificate to be signed by Xxxx Xxxxx, its President and its
Secretary-Treasurer, this day of January, 1999.
By:
------------------------------
Xxxx Xxxxx, President and
Secretary - Treasurer
EXHIBIT "C"
To Agreement and Plan of Reorganization
Form of Investment Letter
INVESTMENT LETTER
TO THE BOARD OF DIRECTORS OF VANGUARD ENTERPRISES, INC. ("Corporation")
The undersigned hereby represents to the Corporation, that (1) the shares
of the Corporation's common stock (the "Securities") which are being acquired by
the undersigned are being acquired for his own account and for investment and
not with a view to the public resale or distribution thereof; (2) the
undersigned will not sell, transfer or otherwise dispose of the securities
except in compliance with the Securities Act of 1933, as amended (the "Act");
and (3) he is aware that the Securities are "restricted securities" as that term
is defined in Rule 144 or the General Rules and Regulations under the Act.
The undersigned acknowledges that he has been afforded access to disclosure
documents and information regarding the Corporation as requested by the
undersigned.
The undersigned further acknowledges that he has had an opportunity to ask
questions of and receive answers from duly designated representatives of the
Corporation concerning the terms and conditions pursuant to which the Securities
are being purchased. The undersigned acknowledges that he has been afforded an
opportunity to examine such documents and other information which he has
requested for the purpose of verifying the information set forth in the
documents referred to above.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions for
the most part are set forth in Rule 144. The Rule permits sales of "restricted
securities" upon compliance with the requirements of such Rule. If the Rule is
available to the undersigned, the undersigned may make only routine sales of
securities, in limited amounts, in accordance with the terms and conditions of
that Rule.
The Company is the only person which may register its Securities under the
Act and it currently is not contemplating registering any of its Securities.
Furthermore, the Company has not made any representations, warranties or
covenants to the undersigned regarding registration of the Securities or
compliance with any exemption under the Act.
By reason of my knowledge and experience in financial and business matters
in general, and investments in particular, I am capable of evaluating the merits
and risks of an investment by me in the Securities.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall bear the
following legend, which the undersigned has read and understands:
The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
The undersigned further agrees that the Corporation shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Corporation has informed the undersigned of its intention to issue such
instructions.
Very truly yours,
------------------------------
Date:___________ , 1999
