EX - 10.2
AGREEMENT & PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization ("Agreement") between Fidelity
Capital Group Holdings, Inc., a Nevada corporation ("FCGH"), and Xxxxx
Xxxxxxxxxx, the sole shareholder (the "Shareholder"), being the owner of record
of all of the issued and outstanding shares of Icon Trading, Inc., a California
corporation, which is the owner of the following wholly owned subsidiaries:
1. Stitch Free Technology, Inc., a California corporation,
2. TSA Skateboard Clothing, Inc., a California corporation,
3. Tigullio Dive Products, Inc., a California corporation, and
4. Diakka Watches, Inc., a California corporation
WHEREAS, on October 1, 1999, an option to purchase the above referenced
subsidiaries of Icon Trading, Inc. was granted to Fidelity Capital Group
Holdings, Inc.; and
WHEREAS, FCGH now wishes to exercise that option and acquire the
hereinbefore named subsidiaries and the Shareholder wishes to transfer all of
the issued and outstanding stock in each of the hereinbefore named subsidiaries
of Icon Trading, Inc. in exchange for 5,000,000 shares of common stock of FCGH
the value of said stock to be determined based upon the market value of said
shares on the date of closing of this transaction.
Additionally, as a condition of this Agreement, the parties understand
and agree that Icon Trading, Inc. entered into subscription agreements with 1184
subscribers ["the 1184 Subscribers"] who were to receive stock in Icon Trading
in exchange for monies which were solicited by Icon Trading from them and which
was paid and used in Icon Trading to develop the various subsidiaries of Icon
Trading which FCGH is now purchasing.
Therefore, as a condition of the purchase of the subsidiaries, FCGH
agrees to issue to the 1184 subscribers to shares in Icon Trading, a number of
shares in FCGH equal to the number of shares which the said subscriber had
subscribed in Icon Trading.
NOW, THEREFORE, FCGH and the Shareholder adopts this Plan of
Reorganization and the parties agree as follows:
SECTION 1. EXCHANGE OF STOCK
1.01 NUMBER OF SHARES. The Shareholder agrees to transfer to FCGH at
losing all shares of stock presently owned by Icon Trading, Inc. in Stitch Free
Closing all shares of stock presently owned by Icon Trading, Inc. in Stitch Free
Technology, Inc., TSA Skateboard Clothing, Inc., Tigullio Dive Products, Inc.
and Diakka Watches, Inc. [hereinafter referred to as "the Company Shares"] in
exchange for 5,000,000 shares of FCGH.
1.02 DELIVERY OF CERTIFICATES BY SHAREHOLDERS. The transfer of the
Company Shares by the Shareholders shall be effected by the delivery to FCGH at
the Closing of certificates representing the Company Shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank or broker-dealer.
1.03 FURTHER ASSISTANCE. At the Closing and from time to time
thereafter, the Shareholders shall execute such additional instruments and take
such other action as FCGH may request in order to more effectively sell,
transfer and assign the transferred Company Shares to FCGH and to confirm FCGH's
title thereto.
1.04 CHANGES IN FCGH'S CAPITALIZATION. Based upon the authorization of
the Board of Directors of FCGH made on October 1, 1999, all shares in FCGH which
were outstanding as of January 2, 2000 shall be reverse split 1 share for every
50 shares outstanding as of that date. The shares being issued to the
Shareholder and to the 1184 Subscribers under the terms of this Agreement will
be post-split shares.
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1.05 CHANGE IN NAME OF CORPORATION. Upon closing or as soon thereafter
as practicable FCGH shall change its name to Cyrus Industries, Inc. and shall
after that time be known as Cyrus Industries, Inc.
SECTION 2. CLOSING
2.01 The closing contemplated by Section 1.01 (the "Closing") shall be
held at the offices of FCGH , on May 1, 2000, or as soon as practical thereafter
unless another place or time is agreed upon in writing by the parties.
2.02 The effective date of this transaction for purposes of reflecting
the income and expense of the Company on the consolidated balance sheet and
income statement of FCGH shall be January 2, 2000 even though this Agreement is
being executed at a later date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholder hereby warrants, represents and agrees as follows:
3.01 CORPORATE STATUS. Each of the companies being transferred is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and is licensed or qualified as a corporation in all
jurisdictions in which the nature of its business or the character or ownership
of its properties makes such licensing or qualification necessary.
3.02 CAPITALIZATION. The authorized capital stock of each of the
companies consists of 10,000 shares of common stock, of which 1,000 shares are
issued and outstanding in each. All such shares are fully paid and
non-assessable.
3.03 FINANCIAL STATEMENTS. The financial statements of each of the
Companies has been furnished to FCGH , consisting of an unaudited balance sheet
as of June 1, 2000 and a related statement of income for the period then ended
(the "Financial Statements") will be delivered at the Closing, will be correct
and fairly present the financial condition of the Company as of the dates and
for the periods involved.
3.04 UNDISCLOSED LIABILITIES. None of the Companies has any liabilities
of any nature except to the extent reflected or reserved against in the
Financial Statements, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, and the Companys' accounts receivable are collectible in accordance with
the terms of such accounts, except to the extent of the reserve therefor in the
Financial Statements.
3.05 INTERIM CHANGES. Between January 2, 2000 and the date this
Agreement is executed, there have not been, (1) any changes in any of the
Companys' financial condition, assets, liabilities, or business which, in the
aggregate, have been materially adverse; (2) any damage, destruction or loss of
or to the Companys' property, whether or not covered by insurance; (3) any
declaration or payment of any dividends or other distribution in respect of the
Company's capital stock, or any direct or indirect redemption, purchase or other
acquisition or any such stock; or (4) any increase paid or agreed to in the
compensation, retirement benefits or other commitments to employees.
3.06 TITLE TO PROPERTY. Icon Trading, Inc. has good and marketable
title to all properties and assets, real and personal, reflected in the
Financial Statements of each of the Companies, except as since sold or otherwise
disposed of in the ordinary course of business, and the Company's properties and
assets are subject to no mortgage, pledge, lien or encumbrance, except for liens
shown therein, with respect to which no default exists.
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3.07 LITIGATION. There is no litigation or proceeding pending, or to
Shareholders' knowledge threatened, against or relating to the Company, its
properties or business except as follows:
On September 1, 1999, Xxxxx Xxxxxxxxxx, one of the major shareholders in FCGH
agreed to a preliminary injunction in the matter of PACIFIC XXXXXXX, INC. AND
EXPANDED SEAM TECHNOLOGIES V. XXXXXX XXXXXXXXX, et al., Superior Court, State of
California, County of Orange, Case No. 813160, which enjoined Xxxxx Xxxxxxxxxx,
and Xxxxxx Xxxxxxxxx among others from utilizing or revealing to any third party
what was known as EST technology and from contacting any vendors or suppliers or
representatives relating to LEST technology or claiming any interest in the LEST
technology. LEST technology is not used in any FCGH product and it is not
anticipated that it will ever be used in any FCGH product and for that reason,
the defendants in the above referenced action agreed to allow the injunction to
issue.
Additionally, Icon Trading and Xxxxx Xxxxxxxxxx entered into a consent agreement
with the State of Pennsylvania to cease and desist the sale of subscription
agreements for unregistered shares by Icon Trading and an investigation has been
commenced by the States of Iowa, Kansas and Washington which will lead to a
cease and desist order of a similar nature which may involve fines against Icon
Trading and Xxxxx Xxxxxxxxxx. Xxxxx Xxxxxxxxxx warrants to FCGH that no sales of
subscription agreements have been made after March 20, 2000 and that all sales
ceased as of that date.
3.08 ACCESS TO RECORDS, ETC. From the date of this Agreement to the
Closing, the Shareholder will cause each of the Companies (1) to give to FCGH
and its representatives full access during normal business hours to all of its
offices, books, records, contracts, and other corporate documents and properties
so that FCGH may inspect and audit them; and (2) to furnish such information
concerning the Company's properties and affairs as FCGH may reasonably request.
3.09 CONFIDENTIALITY Until the Closing (and permanently if there is no
Closing), the Shareholder and his representatives will keep confidential any
information which they obtain from FCGH concerning its properties, assets and
business. If the transactions contemplated by this Agreement are not consummated
by June 1, 2000, the Shareholder will return to FCGH all written matter with
respect to FCGH obtained by them in connection with the negotiation or
consummation of this Agreement.
3.10 TITLE TO SHARES. The Shareholder is, in the aggregate, the owner,
free and clear of any liens, claims and encumbrances, of all Company Shares.
3.11 INVESTMENT INTENT. The Shareholder is acquiring the FCGH Shares
for his own respective accounts, for investment purposes, and not for or with a
view to resale or distribution. The FCGH shares shall bear a legend to the
effect that they represent restricted securities which may not be sold,
transferred or hypothecated in the absence of a registration statement under the
Securities Act of 1933, as amended, or an opinion of counsel that registration
is not required.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF FCGH
FCGH represents and warrants to, and covenants with the Shareholders as
follows:
4.01 CORPORATE STATUS. FCGH is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
licensed or qualified as a foreign corporation in all jurisdictions in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
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4.02 CAPITALIZATION. The authorized capital stock of FCGH consists of
50,000,000 shares of common stock, having a par value of $.001 per share, of
which 350,175 post-split free-trading shares are outstanding following the 50 to
1 reverse split not including those post-split shares which will be issued to
the Sharehdolder and to the 1184 Shareholders.
4.03 UNDISCLOSED LIABILITIES. FCGH has no liabilities of any
nature except to the extent reflected in Exhibit C, attached hereto.
4.04 TITLE TO PROPERTY. FCGH has good and marketable title to all
properties and assets, real and personal, and FCGH 's properties and assets are
subject to no mortgage, pledge, lien or encumbrance, except for liens shown
therein, with respect to which no default exists.
4.05 LITIGATION. There is no litigation or proceeding pending, or to
FCGH 's knowledge threatened, against or relating to FCGH , its properties or
business other than as follows:
On June 3, 1999, Fidelity Capital Group Holdings, Inc. was sued by Xxxxxx X.
Xxxxx of Greenville, North Carolina in the United States District Court for the
Eastern District of North Carolina, Case No. 4:99-CV-76-H3, in which the
plaintiff alleges that on or about June 6, 1998, a dealer broker by the name of
International Bond and Share, and its agent, Xxxxxxx Posculli, Jr., solicited
the plaintiff to purchase shares in the corporation under a Regulation 504
exemption and that the plaintiff purchased 20,000 shares of stock in the Company
for $100,000.00. Plaintiff claims that the agent for the broker dealer, Xxxxxxx
Posculli, promised the plaintiff a doubling of his money in 5 days and told him
that the investment was a "sure thing." The plaintiff claims that he confirmed
the promises made by Posculli by speaking on the telephone with Xxxxx Xxxxx,
then president of the Company, in California. The plaintiff further claims that
the 504 offering could only be made to residents of California, New York,
Connecticut, Florida, Colorado and the District of Columbia and that the
plaintiff resided in North Carolina. The plaintiff claims damages in the amount
of $95,000.00 for the loss in the value of his stock investment, additionally
requesting recission and return of his $100,000.00 investment. Company records
show that the plaintiff claimed to be a resident of Florida at the time he was
solicited and gave a Florida address. The Company president at the time, Xxxxx
Xxxxx, has no recollection of ever speaking to the plaintiff on the telephone.
International Bond and Share is no longer in business and Xxxxxxx Posculli's
whereabouts are currently unknown. The Company was served on this matter on May
16, 2000. The Company has retained Xxxxxxxx X. Xxxxx & Associates, P.C. to file
a motion to dismiss in North Carolina on the basis that the action was not
brought in the proper venue or, in the alternative, to change venue to
California. Counsel for the Company does not believe that the Company has any
direct liability to the plaintiff but, there is a potential that the Company
could be required to pay the plaintiff his losses or to return his initial
investment. Additionally, the Company will be required to pay attorneys fees and
costs in connection with the defense of this lawsuit.
4.06 CONFIDENTIALITY. Until the Closing (and permanently if there is no
Closing), the Company and its representatives will keep confidential any
information which it obtained from the Company concerning its properties, assets
and business. If the transactions contemplated by this Agreement are not
consummated by May 1, 2000 FCGH will return to the Company all written matter
with respect to the Company obtained by it in connection with the negotiation or
consummation of this Agreement.
4.07 INVESTMENT INTENT. FCGH is acquiring the Company Shares to be
transferred to it under this Agreement for investment and not with a view to the
sale or distribution thereof, and FCGH has no commitment or present intention to
liquidate the Company or to sell or otherwise dispose of the Company Shares.
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4.08 CORPORATE AUTHORITY. FCGH has full corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder and will
deliver to the Shareholders at the Closing a certified copy of resolutions of
its Board of Directors authorizing execution of this Agreement by its officers
and performance thereunder.
4.09 DUE AUTHORIZATION. Execution of this Agreement and performance by
FCGH hereunder has been or prior to the Closing will be duly authorized by all
requisite corporate and Shareholders action on the part of FCGH , and this
Agreement constitutes a valid and binding obligation of FCGH and performance
hereunder will not violate any provision of FCGH 's Articles of Incorporation,
Bylaws, mortgages, agreements with third parties or other commitments.
SECTION 5. CONDUCT OF COMPANY PENDING THE CLOSING
The Shareholder agrees that from the date of this Agreement until the
Closing none of the Companies will conduct themselves in the following manner:
5.01 CERTIFICATE OF INCORPORATION AND BYLAWS. The Companies will not
change their respective Certificate of Incorporation or Bylaws.
5.02 CAPITALIZATION, ETC. The Companies will not make any change in
their respective authorized, issued or outstanding capital stock; grant any
stock option or right to purchase shares of its capital stock; issue any
security convertible into shares of its capital stock; purchase, redeem, retire,
or otherwise acquire any shares of its capital stock; or agree to do any of the
foregoing; or declare, set aside or pay any dividend or other distribution in
respect of its capital stock.
5.03 BUSINESS IN ORDINARY COURSE. Each of the Companies will conduct
their business in the ordinary course and will (1) use their best efforts to
preserve their respective business organizations intact, to keep available to
FCGH the services of their present officers and employees and to preserve the
goodwill of suppliers, customers and others having business relations with it;
(2) maintain their properties in customary repair, working order and condition,
reasonable wear and tear and damage by casualty excepted; (3) keep in force at
no less than their present limit all policies of insurance; (4) make no material
change in the customary terms and conditions on which it extends credit to
customers; and (5) enter into no sale, lease, contract, commitment or other
transaction; provided, however, that nothing in this Section 5.03 shall prohibit
compliance by the Company with, or the Company's borrowings or repayment funds
pursuant to, and agreements or other commitments disclosed by the Company to
FCGH .
5.04 BANKING ARRANGEMENTS; POWERS OF ATTORNEY. None of the Companies
will make any changes in their respective banking and safe deposit arrangements
and will not grant any powers of attorney.
5.05 ACCOUNTING PRACTICES. Except as required by generally accepted
accounting principles, none of the Companies will make any changes in their
accounting methods or practices.
5.06 MERGER, ETC. None of the Companies will merge or consolidate with
any other corporation; sell or lease all or substantially all of its assets and
business; acquire all or substantially all of the stock of the business or
assets or any other person, corporation or business organization; or agree to do
any of the foregoing.
SECTION 6. COVENANTS AFTER THE CLOSING
6.01 AFTER CLOSING. From and after the Closing, all parties hereto
agree to issue certificates representing the FCGH Shares to the
Shareholders of the Company pursuant to Paragraph 1.01 hereof.
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SECTION 7. CONDITIONS PRECEDENT - FCGH
All obligations of FCGH under this Agreement are subject, at FCGH 's
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
7.01 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The Shareholder
representations and warranties contained in this Agreement shall be true and
correct as of the date hereof and as of the Closing in all material respects.
7.02 DUE PERFORMANCE. The Shareholder shall have performed and complied
with all the terms and conditions required by this Agreement to be performed or
complied with by them before the Closing.
7.03 BOOKS AND RECORDS. The Shareholder has caused each of the
Companies to make available to FCGH all books and records of each of the
Companies, including minute books and stock transfer records.
SECTION 8. CONDITIONS PRECEDENT - THE SHAREHOLDER
All obligations of the Shareholder under this Agreement are subject, at
their option, to the fulfillment, before or at the Closing, of each of the
following conditions:
8.01 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. FCGH's
representations and warranties contained in this Agreement shall be true and
correct as of the date hereof at and as of the Closing in all material respects.
8.02 DUE PERFORMANCE. FCGH shall have performed and complied
with all of the terms and conditions required by this Agreement to be performed
or complied with by it before the Closing.
8.03 REVOCATION OF PRIOR AUTHORIZATIONS. The Shareholder shall have
delivered to FCGH , certified copies of resolutions of each of the Companys'
Boards of Directors revoking as of the Closing all prior authorizations, powers
of attorney, designations and appointments relating to the signing of checks,
borrowing of funds, access to corporate safe deposit boxes and other similar
matters, to the extent requested by FCGH .
8.04 RESIGNATIONS. There shall have been delivered to FCGH the signed
resignations of such directors of the Company as FCGH shall request, dated as of
the Closing.
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SECTION 9. INDEMNIFICATION
9.01 INDEMNIFICATION OF FCGH . The Shareholder severally (and not
jointly) agrees to indemnify FCGH against any loss, damage or expense (including
reasonable attorneys' fees) suffered by FCGH from (1) any breach by the
Shareholders of this Agreement; or (2) any inaccuracy in or breach of any of the
representations, warranties or covenants by the Shareholders herein; provided,
however that (a) FCGH shall be entitled to assert rights of indemnification
hereunder only if and to the extent that it suffers losses, damages and expenses
(including reasonable attorneys' fees) exceeding $50,000 in the aggregate; and
(b) FCGH shall give notice of any claims hereunder within the twenty-four (24)
month period beginning on the date of the Closing. No loss, damage or expense
shall be deemed to have been sustained by FCGH to the extent of insurance
proceeds paid to, or tax benefits realizable by, FCGH or the Company as a result
of the event giving rise to such light indemnification.
9.02 INDEMNIFICATION OF SHAREHOLDERS. FCGH agrees to indemnify the
Shareholders against any loss, damage or expense (including reasonable
attorneys' fees) suffered by any of the Shareholders from (1) any breach by FCGH
of this Agreement; or (2) any inaccuracy in or breach of any of FCGH 's
representations, warranties or covenants herein.
9.03 DEFENSE OF CLAIMS. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party of any claim
which has given or could give rise to a right of indemnification under this
Agreement. If the right of indemnification relates to a claim asserted by a
third party against the indemnified party, the indemnifying party shall have the
right to employ counsel acceptable to the indemnified party to cooperate in the
defense of any such claim. So long as the indemnifying party is defending any
such claim in good faith, the indemnified party will not settle such claim. If
the indemnifying party does not elect to defend any such claim, the indemnified
party shall have no obligation to do so.
SECTION 10. TERMINATION
10.01 TERMINATION. This Agreement may be terminated (1) by mutual
consent in writing; (2) by either the Shareholders or FCGH if there has been a
material misrepresentation or material breach of any warranty or covenant by the
other party; or (3) by either the Shareholders of FCGH if the Closing shall not
have taken place, unless adjourned to a later date by mutual consent in writing
by June 1, 2000
SECTION 11. GENERAL PROVISIONS
11.01 FURTHER ASSURANCES. At any time, and from time to time, after the
Effective 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.
11.02 WAIVER. Any failure on the part of either 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.
11.03 BROKERS. Each party represents to the other party that no broker
or finder has acted for it in connection with this Agreement, and agrees to
indemnify and hold harmless the other party against any fee, loss or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by it.
11.04 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,
as follows:
To: Fidelity Capital Group Holdings, Inc.
c/o Xxxxx X. Xxxxx
------------------
000 Xxxxxxxx, 0xx Xxxxx
Xxxxxx Xxxxx, XX 00000
To: Icon Trading, Inc.
c/o Xxxxx Xxxxxxxxxx
--------------------
XX Xxx 000
Xxxxxxxxxx Xxxxx, XX 00000
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11.05 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
11.06 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.
11.07 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada.
11.08 ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this Agreement
without the written consent of the other party shall be void.
11.09 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. Facsimile
signatures shall be considered as original signatures.
Effective this 23rd day of December, 1999 and executed as of this 20th
day of April, 2000.
Fidelity Capital Group Holdings, Inc.
By: /s/ Xxxxx X. Xxxxx
----------------------
Xxxxx X. Xxxxx
President
FCGH Industries, Inc.
SHAREHOLDER OF Icon Trading Inc.,
By: /s/ Xxxxx Xxxxxxxxxx
------------------------
Xxxxx Xxxxxxxxxx
President & Sole Shareholder
Shares of FCGH being issued: 5,000,000
By: /s/ Xxxxx Xxxxxxxxxx
------------------------
Xxxxx Xxxxxxxxxx
Sole Shareholder of Icon Trading, Inc.
Individually
Stitch Free Technology, Inc.
By: s/ Xxxx Xxxxxxx
-----------------------
Xxxx Xxxxxxx
President
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TSA Skateboard Clothing, Inc.
By: s/ Xxxx Xxxxxxx
-----------------------
Xxxx Xxxxxxx
President
Tigullio Dive Products, Inc.
By: /s/ Xxxx Xxxxxxx
-----------------------
Xxxx Xxxxxxx
President
Diakka Watches, Inc.,
By: /s/ Xxxx Xxxxxxx
-----------------------
Xxxx Xxxxxxx
President
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