AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION

EXHIBIT 2.1

 

 

 

 

 

 

 

AMENDED AND RESTATED

AGREEMENT AND PLAN OF REORGANIZATION

AMONG

 

VISION GLOBAL SOLUTIONS, INC.,

 

VGS ACQUISITION CORP.,

 

AND

 

FORTES FINANCIAL, INC.

 

 

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TABLE OF CONTENTS

 

 

 

 

 

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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION

This AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (hereinafter, this “ Agreement ”) effective as of this 4th day of August, 2008, by and among Vision Global Solutions, Inc., a Nevada corporation (hereinafter, “ VIGS ”); VGS Acquisition Corp., a newly-formed Delaware corporation and wholly-owned subsidiary of VIGS (hereinafter, “ VGS Sub ”), on one hand, and Fortes Financial, Inc., a Delaware corporation (hereinafter, “ Fortes ” or the “ Surviving Corporation ”) on the other hand, with relevance to the facts set forth in the Recitals below. This Agreement is made and entered into by and among the parties in order to supercede, amend and restate the prior Agreement and Plan of Reorganization date May 14, 2008 by and among the parties.

RECITALS

A.

Purpose . VIGS desires to acquire Fortes as a wholly-owned subsidiary and to issue shares of VIGS Common Stock and VIGS Preferred Stock (defined below), as applicable, to the stockholders of Fortes upon the terms and conditions set forth herein. VGS Sub is a wholly-owned subsidiary corporation of VIGS that shall be merged with and into Fortes, whereupon Fortes shall be the surviving corporation of said merger and shall become a wholly-owned subsidiary of VIGS (VGS Sub and Fortes are sometimes collectively hereinafter referred to as the “ Constituent Corporations ”).

B.

Board and Shareholder Approvals . The boards of directors of VIGS, VGS Sub and Fortes, respectively, deem it advisable and in the best interests of such corporations and their respective stockholders that VGS Sub merge with and into Fortes pursuant to this Agreement and the Delaware Certificate of Merger (which is substantially in the form attached hereto as Exhibit A ) and pursuant to applicable provisions of law (such transaction hereafter referred to as the “ Merger ”).

C.

Capitalization of VIGS . VIGS has an authorized capitalization consisting of (i) 200,000,000 shares of Class A Common Stock, par value $0.001 per share, of which 85,493,885 shares are issued and outstanding as of the date hereof (“ VIGS Common Stock ”) and (ii) 5,000,000 authorized shares of preferred stock (“ VIGS Preferred Stock ”), of which none are issued and outstanding as of the date hereof.

D.

Capitalization of VGS SUB . VGS Sub has an authorized capitalization consisting of 1,000 shares of par value $0.001 per share of common stock, of which 1,000 shares shall be issued and outstanding and owned by VIGS as of the closing of the Merger.

E.

Capitalization of Fortes . Fortes has an authorized capitalization consisting of (i) 100,000,000 shares of common stock, par value $0.0001 per share (“ Fortes Common Stock ”), of which 14,020,000 shares are issued and outstanding as of the date hereof, and (ii) 50,000,000 authorized shares of Preferred Stock, par value $0.0001 per share, including: (a) 5,000,000 authorized shares of Series A Preferred Stock, (“Fortes Series A Preferred Stock”), of which 3,170,000 shares are issued and outstanding, (b) 20,000,000 authorized shares of Series B Preferred Stock, (“ Fortes Series B Preferred Stock ”), of which 3,052,666 shares are issued and outstanding, and (c) 5,000 authorized shares of Series C Preferred Stock (“ Fortes Series C Preferred Stock ”), of which 5,000 shares were currently issued and outstanding, and (d) 24,995,000 remaining undesignated authorized shares of preferred stock, (“ Fortes Undesignated Preferred Stock ”), of which none are currently issued and outstanding as of the date hereof (the Fortes Series A Preferred Stock, the Fortes Series B Preferred Stock, the Fortes Series C Preferred Stock and the Fortes Undesignated Preferred Stock shall be collectively referred to herein as the “ Fortes Preferred Stock ”). Further, Fortes currently has outstanding warrants to purchase 11,388,936 shares of Common Stock of Fortes.

F.

Filing of the VIGS Amended Articles . Prior to the closing of the Merger, the Board of Directors of VIGS shall seek to obtain, in compliance with SEC regulations, shareholder approval in order to duly authorize, effectuate and file the VIGS Amended Articles (defined below) with the Secretary of State of Nevada.

G.

Conversion of the Fortes Preferred Stock . It is contemplated that immediately prior to the closing of the Merger, Fortes will issue additional shares of Fortes Series B Preferred Stock and warrants to purchase Fortes Common Stock to accredited investors who subscribe for shares of Fortes Series B currently being offered to accredited investors in a private placement. Any of the foregoing additional shares of Fortes Series B Preferred Stock and Common Stock purchase warrants that are issued and outstanding prior to the Merger, shall be exchanged for VIGS Common Stock and VIGS Common Stock purchase warrants in the Merger on the same basis as all other authorized and outstanding shares of Fortes Preferred Stock and Fortes Common Stock and warrants are exchanged and as set forth in Section (c) below.

 

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NOW THEREFORE, for the mutual consideration set out herein, and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:

AGREEMENT

1.

Plan of Reorganization . The parties to this Agreement do hereby agree that VGS Sub shall be merged with and into Fortes upon the terms and conditions set forth herein and in accordance with the provisions of the Delaware General Corporation Law. It is the intention of the parties hereto that this transaction qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, and related sections thereunder.

2.

Terms of Merger . In accordance with the provisions of this Agreement and the requirements of applicable law, VGS Sub shall be merged with and into Fortes as of the Effective Date (the terms “ Closing ” and “ Effective Date ” are defined in Section 6 hereof). Fortes shall be the Surviving Corporation and the separate existence of VGS Sub shall cease when the Merger shall become effective. Consummation of the Merger shall be upon the following terms and subject to the conditions set forth herein:

(a)

Corporate Existence .

(1)

Commencing with the Effective Date, the Surviving Corporation shall continue its corporate existence as a Delaware corporation and (i) it shall thereupon and thereafter possess all rights, privileges, powers, franchises and property (real, personal and mixed) of each of the Constituent Corporations; (ii) all debts due to either of the Constituent Corporations, on whatever account, all causes in action and all other things belonging to either of the Constituent Corporations shall be taken and deemed to be transferred to and shall be vested in the Surviving Corporation by virtue of the Merger without further act or deed; and (iii) all rights of creditors and all liens, if any, upon any property of any of the Constituent Corporations shall be preserved unimpaired, limited in lien to the property affected by such liens immediately prior to the Effective Date, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation.

(2)

At the Effective Date, (i) the Certificate of Incorporation and the By-laws of Fortes, as existing immediately prior to the Effective Date, shall be and remain the Certificate of Incorporation and By-Laws of the Surviving Corporation; (ii) the members of the Board of Directors of Fortes holding office immediately prior to the Effective Date shall remain as the members of the Board of Directors of the Surviving Corporation (if on or after the Effective Date a vacancy exists on the Board of Directors of the Surviving Corporation, such vacancy may thereafter be filled in a manner provided by applicable law and the By-laws of the Surviving Corporation); and (iii) until the Board of Directors of the Surviving Corporation shall otherwise determine, all persons who held offices of Fortes at the Effective Date shall continue to hold the same offices of the Surviving Corporation.

(b)

Events Occurring Prior to the Closing .

(1)

Prior to the Effective Date of the Merger, the Board of Directors and the shareholders of VIGS shall duly authorize and approve an eighty-for-one (80:1) reverse stock split (the “ Reverse Split ”) of VIGS Common Stock. In connection with the Reverse Split, the total number of issued and outstanding shares of VIGS Common Stock held by each stockholder will be converted automatically into the number of whole shares of VIGS Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by such stockholder immediately prior to the Reverse Split, divided by (ii) 80. The VIGS Preferred Stock shall remain unaffected by the Reverse Split. No fractional shares will be issued, and no cash or other consideration will be paid. Instead of issuing fractional shares, VIGS will issue one full share of the post-Reverse Split VIGS Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Split;

(2)

Prior to the Effective Date of the Merger, the Board of Directors of VIGS shall duly authorize the Amended and Restated Articles of Incorporation of VIGS in the form attached hereto as Exhibit B (the “ VIGS Amended Articles ”) so that VIGS shall have an authorized capitalization consisting of 200,000,000 shares of common stock, par value $0.001 per share (“ VIGS Common Stock ”), of which, 943,675 shares will be issued and outstanding as the Effective Date of the Merger; and 50,000,000 authorized shares of VIGS Preferred Stock, including (a) 5,000 authorized shares of Series A Preferred Stock of VIGS (“ VIGS Series A Preferred Stock ”), par value $0.001 per share (b) 49,995,000 remaining undesignated authorized shares of preferred stock, (“ VIGS Undesignated Preferred Stock ”), of which none will be issued and outstanding as of the date of the Effective Date of the Merger (collectively, the

 

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VIGS Series A Preferred Stock, and the Undesignated Preferred Stock shall be collectively referred to herein as the “ VIGS Amended Preferred Stock ”). Upon receipt of the necessary shareholder approval (which VIGS covenants to obtain), the Board of Directors of VIGS shall cause the VIGS Amended Articles to be filed with the Nevada Secretary of State.

(3)

It is currently contemplated that prior to the Effective Date of the Merger, Fortes shall (i) close its private offerings under Regulation D, Rule 506, as promulgated by the Securities and Exchange Commission (“ SEC ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), pursuant to which it will issue up to 6,947,334 additional shares of Fortes Series B Preferred Stock (collectively, the “ Private Placement ”). All of the shares of Fortes Series B Preferred Stock issued as part of the Private Placement shall be included in the shares of Fortes that are outstanding at the time of the Merger and shall be converted or exchanged in the Merger in accordance with Section 2(c)(1) below.

(c)

Conversion of Securities .

As of the Effective Date and without any action on the part of VIGS, VGS Sub, Fortes or the holders of any of the securities of any of these corporations, each of the following shall occur:

(1)

Each share of Fortes Common Stock issued and outstanding immediately prior to the Effective Date shall be converted into one (1) share of VIGS Common Stock. All such shares of Fortes Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously evidencing any such shares shall thereafter represent the right to receive, upon the surrender of such certificate in accordance with the provisions of Section 3 hereof, certificates evidencing such number of shares of VIGS Common Stock, respectively, into which such shares of Fortes Common Stock were converted. The holders of such certificates previously evidencing shares of Fortes Common Stock outstanding immediately prior to the Effective Date shall cease to have any rights with respect to such shares of Fortes Common Stock except as otherwise provided herein or by law;

(2)

Each share of Fortes Series A Preferred Stock issued and outstanding immediately prior to the Effective Date shall be converted into one (1) share of VIGS Common Stock. All such shares of Fortes Series A Preferred Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously evidencing any such shares shall thereafter represent the right to receive, upon the surrender of such certificate in accordance with the provisions of Section 3 hereof, certificates evidencing such number of shares of VIGS Common Stock, respectively, into which such shares of Fortes Series A Preferred Stock were converted. The holders of such certificates previously evidencing shares of Fortes Series A Preferred Stock outstanding immediately prior to the Effective Date shall cease to have any rights with respect to such shares of Fortes Series A Preferred Stock except as otherwise provided herein or by law;

(3)

Each share of Fortes Series B Preferred Stock issued and outstanding immediately prior to the Effective Date shall be converted into one (1) share of VIGS Common Stock. All such shares of Fortes Series B Preferred Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously evidencing any such shares shall thereafter represent the right to receive, upon the surrender of such certificate in accordance with the provisions of Section 3 hereof, certificates evidencing such number of shares of VIGS Series B Preferred Stock, respectively, into which such shares of Fortes Common Stock were converted. The holders of such certificates previously evidencing shares of Fortes Series B Preferred Stock outstanding immediately prior to the Effective Date shall cease to have any rights with respect to such shares of Fortes Series B Preferred Stock except as otherwise provided herein or by law;

(4)

Each share of Fortes Series C Preferred Stock issued and outstanding immediately prior to the Effective Date shall be converted into one (1) share of VIGS Series A Preferred Stock. All such shares of Fortes Series C Preferred Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously evidencing any such shares shall thereafter represent the right to receive, upon the surrender of such certificate in accordance with the provisions of Section 3 hereof, certificates evidencing such number of shares of VIGS Series A Preferred Stock, respectively, into which such shares of Fortes Series C Preferred Stock were converted. The holders of such certificates previously evidencing shares of Fortes Series C Preferred Stock outstanding immediately prior to the Effective Date shall cease to have any rights with respect to such shares of Fortes Series C Preferred Stock except as otherwise provided herein or by law;

 

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(5)

Any shares of Fortes capital stock held in the treasury of Fortes immediately prior to the Effective Date shall automatically be canceled and extinguished without any conversion thereof and no payment shall be made with respect thereto;

(6)

Each share of capital stock of VGS Sub issued and outstanding immediately prior to the Effective Date shall remain in existence as one (1) share of common stock of the Surviving Corporation, which shall be wholly-owned by VIGS;

(d)

Other Matters .

(1)

Upon the effectiveness of the Merger, each outstanding option or warrant to purchase Fortes Common Stock, whether or not then exercisable, shall be converted into an option or warrant to purchase (in substitution for each share of Fortes Common Stock subject to an Fortes option or warrant) one (1) share of VIGS Common Stock at a price equal to the exercise price in effect immediately prior to the Merger. All other terms and conditions of each Fortes option or warrant shall remain the same.

(2)

Upon the effectiveness of the merger, each promissory note convertible into shares of Fortes Common Stock, whether or not then convertible, shall be converted into a promissory note convertible into shares of VIGS Common Stock at the conversion rate in effect immediately prior to the Merger. All other terms and conditions of each Fortes convertible promissory note shall remain the same.

(3)

At the Closing, the number of directors of VIGS will be increased to three (3). The then existing sole director of VIGS shall then nominate and elect to the Board of Directors of VIGS the three persons designated by Fortes, and all of the persons serving as directors and officers of VIGS immediately prior to the Closing shall thereafter resign from all of their positions with VIGS, effective immediately as of the Closing, and the newly designated directors shall commence at that time their respective terms.

(4)

Upon the effectiveness of the Merger, VIGS shall assume and will be bound by the registration rights agreements previously entered into, or hereafter entered into, between Fortes and (i) the subscribers who have previously purchased shares of Fortes Series A Preferred Stock and (ii) the subscribers who subscribe for the Series B or Series C Preferred Stock of Fortes in the Private Placement that is currently scheduled to close prior to the Closing. The terms of the registration rights are set forth as an exhibit to the subscription agreements entered into by each of the foregoing purchasers of shares of Fortes stock. VIGS agrees to execute any agreement or other instrument Fortes deems necessary to confirm its agreement to comply with the registration rights granted by Fortes to the purchasers of its shares of Series A, Series B, and Series C Preferred Stock.

3.

Delivery of Common and Preferred Shares . On or as soon as practicable after the Effective Date, Fortes will use reasonable efforts to cause all holders of Fortes Preferred and Common Stock, including the holders of Series B Preferred Stock acquired in the Private Placement (collectively, the “ Fortes Stockholders ”) to surrender to VIGS’ transfer agent for cancellation certificates representing their shares of Fortes Common Stock and Fortes Preferred Stock, as applicable, against delivery of certificates representing the shares of VIGS Common Stock and VIGS Series A Preferred Stock, as applicable, for which the Fortes shares are to be converted in the Merger. Until surrendered and exchanged as herein provided, each outstanding certificate which, prior to the Effective Date, represented Fortes Common Stock or Fortes Preferred Stock shall be deemed for all corporate purposes to evidence ownership of the same number of shares of VIGS Common Stock or VIGS Series A Preferred Stock, as applicable, into which the shares of Fortes Common Stock and Fortes Preferred Stock represented by such Fortes certificate shall have been so converted.

4.

Representations of Fortes . Fortes hereby represents and warrants as follows, which warranties and representations shall also be true as of the Effective Date:

(a)

As of the date hereof, the total number of shares of Fortes Common Stock issued and outstanding is 14,020,000, and there 3,170,037 shares of Fortes Series A Preferred Stock currently outstanding, 3,052,666 shares of Fortes Series B Preferred Stock currently outstanding and 5,000 shares of Fortes Series C Preferred Stock currently outstanding. Other than the shares of Fortes Series B Preferred Stock that may be issued immediately prior to the Closing pursuant to the Private Placement as described in Section 2(b) above, the foregoing shares represent all of the shares of Fortes’ capital stock that will be issued and outstanding as of the Effective Date. In addition, Fortes has and warrants to purchase 11,388,936 shares of our common stock to existing holders of warrants to purchase common stock of

 

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Fortes. Further, a $5,000,000 outstanding convertible note issued by Fortes to Castlerigg is convertible into 3,333,333 shares of common stock (at a conversion price $1.50), which in the merger will convert into the right to purchase our common stock on the same terms. Additionally, the outstanding 5,000 shares Fortes Series C Preferred Stock are convertible into 3,333,333 shares of common stock.

(b)

The Fortes Common Stock and Fortes Preferred Stock constitutes duly authorized, validly issued shares of capital stock of Fortes. All shares of Fortes Common Stock and Fortes Preferred Stock are fully paid and nonassessable.

(c)

The Fortes audited financial statements as of and for the year ended December 31, 2007, which have been made available to VIGS (hereinafter referred to as the “ Fortes Financial Statements ”), to the best of Fortes’ Knowledge, fairly present in all material respects the financial condition of Fortes as of the dates thereof and the results of its operations for the periods covered. Other than as set forth in Schedule 4(c) attached hereto, and except as may otherwise be set forth or referenced herein, there are no material liabilities or obligations, either fixed or contingent, not disclosed or referenced in the Fortes Financial Statements or in any exhibit thereto or notes thereto other than contracts or obligations occurring in the ordinary course of business since December 31, 2007. No contracts or obligations occurring in the ordinary course of business constitute liens or other liabilities which materially alter the financial condition of Fortes as reflected in the Fortes Financial Statements. Fortes has or will have at the Closing good title to all assets shown on the Fortes 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 Fortes Financial Statements have been prepared in accordance with generally accepted accounting principles (except as may be indicated therein or in the notes thereto and except for the absence of footnotes).

(d)

Since December 31, 2007, there has not been any material adverse change in the financial position of Fortes except changes arising in the ordinary course of business, which changes will not materially or adversely affect the financial position of Fortes.

(e)

Fortes is not a party to any material pending litigation or, to the actual knowledge of its executive officers (herein, “ Knowledge ”), any governmental investigation or proceeding, not reflected in the Fortes Financial Statements, and, to its Knowledge, no material litigation, claims, assessments or any governmental proceedings are threatened against Fortes.

(f)

Fortes is in good standing in its state of incorporation, and is in good standing and duly qualified to do business in each state where required to be so qualified except where the failure to so qualify would have no material negative impact on Fortes.

(g)

Fortes has, or by the Effective Date will have, filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to be filed in the ordinary course of business and has (or will have) paid or made adequate provisions for all taxes or assessments which have become due as of the Effective Date, except where failure to do so would have no material adverse effect on Fortes.

(h)

Fortes has not materially breached any material agreement to which it is a party. Fortes has made available to VIGS for review copies of or access to all material contracts, commitments or agreements to which Fortes is a party, including all contracts covering relationships or dealings with related parties or affiliates.

(i)

Fortes owns 50% of the outstanding capital stock Cash Flow International, Inc.

(j)

Fortes has made its corporate financial records, minute books, and other corporate documents and records available for review to present management of VIGS prior to the Effective Date, during reasonable business hours and on reasonable notice.

(k)

Subject to the receipt of shareholder approval, Fortes has the corporate power to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been or will prior to the Closing and the Effective Date be duly authorized by the Board of Directors of Fortes and by the stockholders of Fortes. The execution of this Agreement does not materially violate or breach any material agreement or contract to which Fortes is a party, and Fortes, to the extent required, has (or will have by Closing) obtained all necessary approvals or consents required by any agreement to which Fortes is a party. The execution and performance of this Agreement will not violate or conflict with any provision of the Certificate of Incorporation or by-laws of Fortes.

 

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(l)

Information regarding Fortes, which has been delivered by Fortes to VIGS for use in connection with the Merger, is true and accurate in all material respects.

5.

Representations of VIGS and VGS Sub . VIGS and VGS Sub hereby jointly and severally represent and warrant to Fortes as follows, each of which representations and warranties shall continue to be true as of the Effective Date:

(a)

As of the Effective Date, the shares of VIGS Common Stock to be issued and delivered to the Fortes Stockholders hereunder and in connection herewith will, when so issued and delivered, constitute duly authorized, validly and legally issued, fully-paid, nonassessable shares of VIGS capital stock, free of all liens and encumbrances.

(b)

VIGS and VGS Sub have the corporate power to enter into this Agreement and to perform their obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been or will prior to the Closing and the Effective Date be duly authorized by the respective Boards of Directors, and to the extent legally required, shareholder approval, of VIGS and VGS Sub and by VIGS. 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 VIGS or VGS Sub is a party or to which it is otherwise subject and will not violate any judgment, decree, order, writ, law, rule, statute, or regulation applicable to VIGS or VGS Sub or their respective properties. The execution and performance of this Agreement will not violate or conflict with any provision of the respective Articles or Certificate of Incorporation or by-laws of VIGS or VGS Sub.

(c)

VIGS has delivered to Fortes a true and complete copy of its audited financial statements for the fiscal years ended December 31, 2006 and 2007 (the “ VIGS Financial Statements ”). To the best of VIGS Knowledge, the VIGS Financial Statements are complete, accurate and fairly present the financial condition of VIGS 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 VIGS 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 VIGS as of the dates thereof and the results of its operations and changes in financial position for the periods then ended. VGS Sub has no financial statements because it was recently formed solely for the purpose of effectuating the Merger and it has been, is and will remain inactive except for purposes of the Merger, and it has no assets, liabilities, contracts or obligations of any kind other than as incurred in the ordinary course in connection with its incorporation in Delaware. VIGS has no subsidiaries or affiliates except for VGS Sub, and VGS Sub has no subsidiaries or affiliates.

(d)

Since December 31, 2007, there have not been any material adverse changes in the financial condition of VIGS. At the Closing, neither VIGS nor VGS Sub shall have any material assets and neither such corporation now has, nor shall it have, any liabilities of any kind.

(e)

Neither VIGS nor VGS Sub is a party to, or the subject of, any pending litigation, claims, or governmental investigation or proceeding not reflected in the VIGS Financial Statements, and to the Knowledge of VIGS and VGS Sub, there are no lawsuits, claims, assessments, investigations, or similar matters, threatened or contemplated against or affecting VGS Sub, VIGS, or the management or properties of VIGS or VGS Sub.

(f)

VIGS and VGS Sub are each duly organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation; each 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. Neither corporation is required to be qualified to do business in any state other than the states of Nevada (for VIGS) and Delaware (for VGS Sub).

(g)

VIGS and VGS Sub have filed all federal, state, county and local income, excise, property and other tax, governmental and other returns, forms, filings, or reports, which are due or required to be filed by it prior to the date hereof and have paid or made adequate provision in the VIGS Financial Statements for the payment of all taxes, fees, or assessments which have or may become due pursuant to such returns, filings or reports or pursuant to any assessments received, except where the absence or lack of such filing or payment would result in a material adverse effect. Neither VIGS nor VGS Sub is delinquent or obligated for any material tax, penalty, interest, delinquency or charge and there are no tax liens or encumbrances applicable to either corporation.

 

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(h)

As of the date of this Agreement, VIGS’s authorized capital stock consists of 200,000,000 of shares of Common Stock, par value $0.001 per share of which, 75,493,885 shares are currently issued and outstanding as of the date hereof; and 5,000,000 authorized shares of Preferred Stock, of which none are currently issued and outstanding as of the date hereof.

(i)

At the Closing of the Merger, VIGS authorized capital stock shall consist of 200,000,000 shares of VIGS Common Stock, par value $0.001 per share, of which, 943,674 shares will be issued and outstanding; and 50,000,000 authorized shares of VIGS Amended Preferred Stock, including (a) 5,000 authorized shares of VIGS Series A Preferred Stock, $0.001 per share, of which, no shares shall be issued and outstanding, and (b) 49,995,000 remaining VIGS Undesignated Preferred Stock, of which none shall be issued and outstanding. VGS Sub’s capitalization consists solely of 1,000 authorized shares of $0.001 par value common stock (“ VGS Sub’s Common Stock ”), of which 1,000 shares are outstanding, all of which are owned by VIGS, free and clear of all liens, claims and encumbrances. All outstanding shares of capital stock of VIGS and VGS Sub are, and shall be at Closing, validly issued, fully paid and nonassessable. There are no existing options, calls, claims, warrants, preemptive rights, registration rights or commitments of any character relating to the issued or unissued capital stock or other securities of either VIGS or VGS Sub.

(j)

VIGS and VGS Sub have (and at the Closing they will have) disclosed in writing to Fortes on an Exhibit hereto all events, conditions and facts materially affecting the business, financial conditions (including any liabilities, contingent or otherwise) or results of operations of either VIGS or VGS Sub.

(k)

The financial records, minute books, and other documents and records of VIGS and VGS Sub in the actual possession of the management of these entities have been made available to Fortes prior to the Closing. The records and documents of VIGS and VGS Sub that have been delivered to Fortes constitute all of the records and documents of VIGS and VGS Sub that are in the possession of VIGS or VGS Sub.

(l)

Neither VIGS nor VGS Sub has breached, nor is there any pending, or to the Knowledge of the VIGS or VGS Sub, any existing or threatened claim that VIGS or VGS Sub has breached, any of the terms or conditions of any agreements, contracts, commitments or other documents to which it is a party or by which its properties are bound. The execution and performance of this Agreement will not violate any provisions of applicable law or any agreement to which VIGS or VGS Sub is subject. Each of VIGS and VGS Sub hereby represent and warrant that it is not a party to any contract or commitment other than appointment documents with VIGS’s transfer agent, and that it has disclosed to Fortes in writing all previous or existing relationships or dealings with related or controlling parties or affiliates. There are no currently existing agreements with any affiliates, related or controlling persons or entities.

(m)

To the best of management’s Knowledge, VIGS has complied with all of the provisions relating to the issuance of shares, and for the registration thereof, under the Securities Act, other applicable securities laws, and all applicable blue sky laws in connection with any and all of its stock issuance. There are no outstanding, pending or threatened stop orders or other actions or investigations relating thereto involving federal and state securities laws. To the best of management’s Knowledge, all issued and outstanding shares of VIGS equity and other securities were offered and sold in compliance with federal and state securities laws.

(n)

To the best of management’s Knowledge, all information regarding VIGS which has been provided to Fortes by VIGS or set forth in any document or other communication, disseminated to any former, existing or potential stockholders of VIGS or to the public or filed with the NASD or the SEC or any state securities regulators or authorities is true, complete, accurate in all material respects, not misleading, and was and is in full compliance with all securities laws and regulations.

(o)

To the best of management’s Knowledge, VIGS is and has been in compliance with, and VIGS has conducted any business previously owned or operated by it in compliance with, all applicable laws, orders, rules and regulations of all governmental bodies and agencies, including applicable securities laws and regulations (including, by way of example and not limitation the Sarbanes-Oxley Act of 2002) and environmental laws and regulations, except where such noncompliance has and will have, in the aggregate, no material adverse effect. VIGS currently trades on the Over-the-Counter Bulletin Board. VIGS was delinquent in three public filings during the last three years which were required under the Securities Exchange Act of 1934, as amended, resulting in the temporary delisting of VIGS from the Over-the-Counter Bulletin Board for the period of one year. Otherwise, VIGS has not received notice of any noncompliance with the foregoing, nor is it aware of any claims or threatened claims in connection therewith. VIGS has never conducted any operations or engaged in any business transactions whatsoever other than as set forth in the reports VIGS has previously filed with the SEC.

 

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(p)

Without limiting the foregoing, (i) VIGS and any other person or entity for whose conduct VIGS is legally held responsible are and have been in material compliance with all applicable federal, state, regional, local laws, statutes, ordinances, judgments, rulings and regulations relating to any matters of pollution, protection of the environment, health or safety, or environmental regulation or control, and (ii) neither VIGS nor any other person for whose conduct VIGS is legally held responsible has manufactured, generated, treated, stored, handled, processed, released, transported or disposed of any hazardous substance on, under, from or at any of VIGS’ properties or in connection with VIGS’ operations.

(q)

To the best of VIGS’ management’s Knowledge, and except as otherwise disclosed herein, VIGS has filed all required documents, reports and schedules with the SEC, the NASD and any applicable state or regional securities regulators or authorities (collectively, the “VIGS SEC Documents”). As of their respective dates, the VIGS SEC Documents complied in all material respects with the requirements of the Securities Act, the NASD rules and regulations and state and regional securities laws and regulations, as the case may be, and, at the respective times they were filed, none of the VIGS SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. To the best of VIGS’s management’s Knowledge, the VIGS Financial Statements (including, in each case, any notes thereto) of VIGS included in the VIGS SEC Documents complied as to form and substance in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles (except as may be indicated therein or in the notes thereto) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented in all material respects the financial position of VIGS as of the respective dates thereof and the results of its operations and its cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein).

(r)

To the best of VIGS’s management’s Knowledge, except as and to the extent specifically disclosed in this Agreement and as may be specifically disclosed or reserved against as to amount in the latest balance sheet contained in the VIGS Financial Statements, there is no basis for any assertion against VIGS of any liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and whether due or to become due, including, without limitation, any liability for taxes (including e-commerce sales or other taxes), interest, penalties and other charges payable with respect thereto. To the best of management’s Knowledge, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) result in any payment (whether severance pay, unemployment compensation or otherwise) becoming due from VIGS to any person or entity, including without limitation any employee, director, officer or affiliate or former employee, director, officer or affiliate of VIGS, (b) increase any benefits otherwise payable to any person or entity, including without limitation any employee, director, officer or affiliate or former employee, director, officer or affiliate of VIGS, or (c) result in the acceleration of the time of payment or vesting of any such benefits.

(s)

No aspect of VIGS’ past or present business, operations or assets is of such a character as would restrict or otherwise hinder or impair VIGS from carrying on the business of VIGS as it is presently being conducted by VIGS.

(t)

VIGS currently has no employees, consultants or independent contractors other than John Kinney. John Kinney is the sole director and sole executive officer of VIGS, and John Kinney is the sole director and sole executive officer of VGS Sub.

(u)

To the best of VIGS’ management’s Knowledge, VIGS has no material contracts, commitments, arrangements, or understandings relating to its business, operations, financial condition, prospects or otherwise. For purposes of this Section 5, “material” means payment or performance of a contract, commitment, arrangement or understanding that is expected to involve payments in excess of $10,000.

(v)

To the best of VIGS’ management’s Knowledge, other than this Agreement and the transactions contemplated hereby, there are no outstanding contracts, commitments or bids, or services, development, sales or other proposals of either VIGS or VGS Sub.

(w)

There are no outstanding lease commitments that cannot be terminated without penalty upon 30-days’ prior notice, or any purchase commitments, in each case of either VIGS or VGS Sub.

 

A-10

 

(x)

To the best of VIGS’ management’s Knowledge, no representation or warranty by VIGS or VGS Sub contained in this Agreement and no statement contained in any certificate, schedule or other communication furnished pursuant to or in connection with the provisions hereof contains or shall contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein not misleading. There is no current or prior event or condition of any kind or character pertaining to VIGS that may reasonably be expected to have